The rapid growth of urbanization has resulted in tremendous pressure on housing in urban areas, particularly for middle- and lower-income groups. The formal sector has been unable to cater to the affordable housing demand, particularly for urban poor. Islamabad is the planned city and capital of Pakistan; its development started in 1960. A number of squatter settlements have emerged in this planned city which are increasing with the passage of time. The government of Pakistan, realizing the gravity of the problem, started various programs and approached at different times to address this issue. This paper discusses various international and national approaches in this context. Squatter settlements in Islamabad have been visited, and field data were collected through a survey from France Colony Sector F-7/4, Islamabad and recommendations have been suggested in the light of international practices.