This paper addresses the rural housing problem of Bihar. The causes of housing shortage have been identified in the context of rapid population growth, low per capita income, high poverty, unemployment, limited state resources, etc. A suitable strategy and institutional mechanism to implement the objectives of National Housing and Habitat Policy, 1998, may help ameliorate rural housing conditions in the state. This calls for creation of an institution dedicated to rural housing which would facilitate credit, subsidy, technology, formation of self-help groups and support infrastructure required for rural housing.