To examine the association of environmental factors (including housing) with respiratory infections and diarrhoea in children under 5 years of age, a cross-sectional study of 403 families was conducted in a squatter settlement of Karachi. In the 2-week period before the survey prevalence of diarrhoea and respiratory infections was 14·4% and 15·0% respectively. The factors significantly associated (p>0·05) with diarrhoea in households in the multivariate analysis were: number of children under 5, regular cleaning of sewers, storage of water in small utensils and cooking inside a one room house. Five households risk factors were identified for respiratory infections: the number of children under 5, poor housing structure, increased household density, humidity inside the house less than the humidity outside house, and frequent cooking inside the house. These results suggest that children under 5 years of age in lower income areas are at additional risk to health because of poor environmental conditions.