Abstract: Poverty has been recognized as a phenomenon that is of concern to everybody around the world today, both the rich and the poor. The review of the literature shows that one basic way to reduce poverty is for the various governments to engage people in meaningful and satisfying jobs either by creating the jobs or by empowering the people to be self employed. This study looked at the issue of poverty in the developing countries of the world. It then examined unemployment as one of the causes of poverty and proposes flexibility in physical planning laws, development controls and building codes and regulations in developing countries to allow the integration of income generating activities (with minimal environmental impact) into low income housing. Where such mix uses are not allowed, several studies in urban centres in developing countries have shown that a good proportion of residential units are converted to commercial use without approval from the local planning authorities. The result of an empirical study carried out in Surulere local government area, Lagos, Nigeria shows that 87.9% of households in the area did not seek for approval from local town planning authority before they converted part or the whole of their building for the business they were doing. It is also shown that households involved in home income generating activities in high density areas earn more income than those households not involved and the reverse is the case in the medium residential density area. Hence, this supports the view that people converted part of their houses into commercial use to generate additional income and reduce level of poverty. City planners should now understand that the effectiveness of plans to bring about a city's continued economic viability depends on the correct analysis and interpretation of the social, cultural and economic forces interacting within the city.