This study explores the urban poverty and intends to contribute to the study of thernphenomena of rapid urban poverty and poor housing condition in Arada and Lideta sub-citiesrnof Addis Ababa. The study was conducted on primary and secondary data collected fromrnvarious households of the sub-cities. Four hundred households were surveyed to investigaternthe access to toilet, the status of the house, the water supply, socio-economic and sanitationrnsituation. The study was made urban land classification of Arada and Lideta using Remoternsensing technique and poverty area map using GIS technique. In order to achieve thisrnobjective the collected sample of households, Aerial photographs, Ikonos image and otherrndata were analyzed. An overlay analysis is carried out by evaluating the layers obtainedrnaccording to their weight and the poverty susceptibility map is produced. And then classifiedrninto four classes: low, moderate, high, and very high. From the result more residential partsrnof Lideta sub city are found in the highest poverty area than Arada sub city. The majorrnreason for the occurrence of poverty area is their monthly income is very low and inadequaternso that they can not construct, buy, or rent decent dwelling unit. Furthermore, lack ofrnadequate sewerage and water supply, poor housing condition, over crowdedness are amongrnthe main problems. Still more can be inferred that the surveyed households live in anrnunhygienic and congested environment lacking the basic necessities of a healthy life. On thernother hand the remote sensing processed result reveals that the urban land classification arearnchanged through different period of time. Between 1965 and 1984 the built up area and thernroad distribution had increased. During 1984 and 2004 the two sub cities had changed thatrnbuilt up area and road distribution increased. Generally the magnitude of their problems isrnworsening from day to day. To improve these conditions the community needs to be activelyrnparticipation with volunteer investor and small microfinance for the construction of housesrnand financial advancement.