Delhi is experiencing the highest population growth rate among mega cities in India. By 2021 its population is projected to be around 27 million. The consequence of rapid increase in population and the changing socio-economic pattern in Delhi has resulted in an acute shortage of housing and related infrastructure especially for the poor and low-income households. Nearly half the population however lives in conditions of miserable poverty, crammed into overcrowded slums and hutment. Delhi’s informal housing is a reflection of a poor and inappropriate urban planning system, with a lack of public investment and restriction in the formal land and housing market. This paper reviews the housing delivery system and the problems associated with the housing delivery system in Delhi and presents a broad guideline for policy makers to improve the housing delivery system in Delhi. It was found that to improve the housing delivery system of Delhi multiple sectoral approaches are required. The study demonstrates that the informal housing sector and its quality can be improved and transformed into formal housing by improving the essential infrastructure.