Background: Improvements in health are an important expected outcome of many housing infrastructure programs. The authors aimed to determine if improvement in the notoriously poor housing infrastructure in Australian Indigenous communities results in reduction in common childhood illness and to identify important mediating factors in this relationship. Methods: The authors conducted a prospective cohort study of 418 children aged 7 years or younger in 10 Australian Indigenous communities, which benefited most substantially from government-funded housing programs over 2004-2005. Data on functional and hygienic state of houses, reports of common childhood illness and on socio-economic conditions were collected through inspection of household infrastructure and interviews with children's carers and householders. Results: After adjustment for a range of potential confounding variables, the analysis showed no consistent reduction in carers' reporting of common childhood illnesses in association with improvements in household infrastructure, either for specific illnesses or for these illnesses in general. While there was strong association between improvement in household infrastructure and improvement of hygienic condition of the house, there were only marginal improvements in crowding. Conclusions: High levels of household crowding and poor social, economic and environmental conditions in many Australian Indigenous communities appear to place major constraints on the potential for building programs to impact on the occurrence of common childhood illness. These findings reinforce the need for buildingprograms to be supported by a range of social, behavioural and community-wide environmental interventions in order for the potential health gains of improved housing to be more fully realised.