Indonesia is a country with population of 245,613,043 (July 2011 est.). Despite GDP growth rate of 6.1% (2010 est.), the poverty rate is 13.33% or 32,666,535 (2010) with unemployment rate of 7.1% or 17,438,526 (2010 est.) of which 22.2% or 3,871,353 (2009) of them are between ages 15-24. Although the country’s population is the 4th largest in the world, the GDP per capita remains at US$ 4,200 (2010 est.) The need to accommodate people has reached emergency levels in Indonesia. The demand for housing every year is 800,000 units, whereas the supply is no more than 500,000 units. In 2004, Indonesia faced a shortage of 5.4 million houses. In 2010, BPS (Indonesian Central Statistics Agency) recorded the increase in shortage of up to 13.6 million houses. In order to alleviate poverty through economic development, an economicallysustainable model is proposed. It is a co-operative housing cluster that can sustain itself economically. This paper will try to introduce the renewed concept of housing clusters in Indonesia which is based on the traditional kampong. Each housing cluster has common facilities like place of worship e.g. Mosque, Church, etc., clinic, school, playground, micro-bank, and all-in-one mart. The profit generated from the co-operative can be reinvested to improve or expand the facilities, or be distributed as dividends. With the proposed solution, poverty can be alleviated and economic development can be sustained.