The paper will focus on one of the core issues of social inclusion 'economic participation' and its interrelationship with the housing assistance system. There has been little explicit research on the links between housing costs, housing assistance and work disincentives in Australia. While there is a growing literature in social policy and labour market studies looking at work disincentives, none has explicitly taken a housing focus. The Report of the Reference Group on Welfare Reform in 2000 failed to address this issue in any depth, while recognizing its potential importance, a reflection of the low priority government places on housing assistance in the overall structure of welfare and tax reform. The proposed paper will present the interim findings of AHURI funded research on the financial and behavioural impacts of private and public rental housing assistance programs, including the locational outcomes of these different forms of assistance, on the capacity and willingness of unemployed tenants to take work or increase working hours. These findings will be based on a sample survey of 400 unemployed people in Sydney and Melbourne. The paper will therefore directly address key issues relevant to current debates on both the future of the national housing assistance framework and welfare reform.