Sanitation in the urban areas of Odisha, as in most other parts of the country, has been a major challenge. Though one of the least urbanized states in the country,Odisha has registered a significantly high growth rate in the 2001-2011 decade and a considerable increase in the number of Census Towns. The Census of 2011 reflects the poor state of basic services such as water and sanitation in the urban areas. While only 42% of urban households have access to treated tap water, more than 35% do not have access to toilets and only a little over 58% have water closets, with the remaining using pit or other kind of toilets. As much as 98% of the septage and waste water is drained off into rivers and water bodies or into the open environment without any kind of treatment. The situation is of graver concern in small and medium size towns that face a greater capacity and resource crunch. Concerned with the dismal status, the Government of Odisha has initiated several measures to improve the overall situation. Odisha was, in fact, one of the first states to formulate an Urban Sanitation Strategy in 2011. A revised strategy (2016) is also in place focusing on FSM. Odisha revised the strategy and notified in December 2016. Since then several other initiatives, ranging from policy to legislations and programmes, are being drafted to bring about improvements. This document, part of the ongoing initiatives, describes a proposed strategy for capacity building of the urban local bodies (ULBs) for planning and managing sanitation facilities and services with a focus on urban septage and waste water management. The strategy has been developed with reference to small towns and municipalities (based on a study of Angul and Dhenkanal1).