Abstract Inadequate shelter conditions of a very large section of population in the world demands urgent national and international efforts to accelerate the production of shelter, particularly to meet the needs of the poor and disadvantaged. The United Nations have launched a Global Strategy for Shelter to achieve the goal of adequate shelter for all by the year 2000. The shelter sector involves differing and often conflicting interests, viewpoints and demands of various actors. A common ‘value scale’ or ‘performance criteria’ is necessary to resolve such conflicts at various decision levels taking into account the availability of resources. There can be large variation in housing development cost and in the cost affordable by an income group depending on the technical and financial package adopted. To achieve the shelter strategy goal in a most cost-effective way, a model-based approach is necessary, based on the comprehensive analysis of the national context and considering the various stages, i.e. analysis, decisions and actions in a cyclical chain adopting a common ‘value scale’. This will also facilitate the dynamic process of strategic decision making, with compatibility between the end, i.e. adequate shelter for all, and the means, i.e. resources of the country and of the household. This paper presents such a model-based approach for national shelter strategy.