The stagnant nature of economic development and rapid population growth of most developing countries makes effective and efficient service delivery difficult for governments, to satisfy the need of their residents. Housing is one of the basic necessities for human survival; it remains for long period as a critical problem in most the cities of developing countries. This is the main feature of Addis Ababa, which is the capital city of Ethiopia. The housing supply of the last 30-40 years could not cope with the fast raise need. In addition, the government tenure system drives more than 40% of the housing stock to a non-reparable and inhabitable state. The availability of basic infrastructural facilities and amenities is also very limited. The paper deals with analyzing the existing shelter situation of the city to identify and analyze the main causes of the housing problem so as to develop an action plan to implement the proposed strategies, which are believed, enable to bring about a change in the situation and living standard of the low-income families.