This paper reviews the growth of urbanisation in Kerala with a special focus on census towns in Kerala using census data from 1961-2011 and State urbanisation report of the department of town planning. Kerala registered a massive increase in urbanisation from 25 per cent in 2001 to 47 percent in 2011. Major contribution of this increase was due to increase in number of census towns which are not governed by urban local governments.Census has defined census towns as “places that satisfy three fold criteria of population of 5000, 75 per cent of male main working population engaged in non-agricultural pursuits and density of 400 persons per sq.km”. They can be easily defined as transitional urban areas at various levels of transition which is also known as 'urbanisation by implosion' where massive density of population, economic change and access to good level of public services leads to urban growth. In Kerala, the growth of census towns can be attributed to improvement of transport facilities, massive decline of the male workforce in agriculture and related activities along with shift to tertiary sector. The paper highlights several challenges of planning and governance of census towns in Kerala such as spatial planning, waste management, traffic and transport management and use of centrally sponsored schemes. The paper concludes with the suggestion that institutional transition from village panchayats to town panchayats along with a proper legal framework may be required to deal with the challenges of this urban transformation.