The United States Department of Health and Human Services (HHS)--through the explicit and implicit shelter allowance provided under Aid to Families with Dependent Children (AFDC), Supplemental Security Income (SSI), and General Assistance--spends at least $10 billion a year on housing assistance, or about as much as the Department of Housing and Urban Development (HUD). There are, therefore, two streams of government financing of low-income housing: an HUD stream and a welfare stream. This report, examining the efficiency, equity, and overall effectiveness of housing aid, found the following: (1) there is considerable overlap between the goals and the clientele of HUD and HHS programs; (2) the system guarantees that program recipients will live in substandard housing and that similar individuals in different locations will not be treated equally; and (3) the system is ineffective: 46 percent of all welfare households spend more than half their income on housing, 13 percent are overcrowded, and 29 percent live in physically substandard units. Recommendations are made for future policies that will restructure the current system by reducing inequities, improving efficiency, and increasing flexibility. Budgeting issues are discussed. The national commitment to low-income housing must be reinstated. Data are exhibited on 32 tables. Appendices provide additional data. (BJV)