Drawing on a four-year research programme conducted in Sri Lanka (part of a larger programme also conducted in India and Kenya) this paper addresses the issue of building and planning regulations and how such regulations affect people's livelihoods. This paper begins by reviewing the urban housing programmes undertaken in Sri Lanka over the past 30 years with special reference to urban upgrading projects and their respective planning and building regulations. The authors have analysed four cases from Colombo Municipality and two cases from a secondary town, Moratuwa Municipality in Colombo Municipal Authority, in order to assess the impacts of such urban upgrading programmes on the livelihoods of the poor; some conclusions and recommendations have been drawn. Guidance notes (based on a literature review, historical analysis and case studies) are presented towards the end of the paper for the use of local government staff as well as others acting as partners in the improvement of livelihoods in urban areas. Land reforms and land management are key components of any sustainable urban upgrading programme. The authors conclude that regulatory frameworks which take into account existing patterns (with the exception of unsafe practices) of livelihoods and socio-economic aspirations will enhance the potential for sustainable livelihoods.