Housing should be a key element underpinning urban regeneration to ensure long‐term sustainability. Two issues facing urban areas stand out as we reach the millennium— these are urban competitiveness and the negative effect of large numbers of urban residents who are economically and socially excluded. This article argues that a more strategic approach to city regeneration is required, establishing a vision for the future so that smaller‐scale regeneration initiatives have a clear role. Social housing, in particular, can contribute to a city's competitiveness and the revitalization and reintegration of areas of economic and social exclusion. Housing developments can lever in substantial funds, bring local economic spin‐offs and, most importantly, deliver increased community cohesion.