There are currently many families with young children living in inner city Melbourne, in high density apartment buildings designed for singles or couples without children, which has significant implications for children’s health and development. This literature review formed part of a wider research project with the City of Yarra, an inner Melbourne Council with increasing numbers of young families dwelling in new, high-density apartments, to help inform the development of more family-friendly accommodation in the municipality. Following a systematic literature search and appraisal, ten studies were included in the literature review, and discussed using the WHO’s four dimensions of housing framework categories, namely, home, dwelling, community and immediate environment. Overall, the literature included adequate information on the needs of families with children living in high-density inner urban housing, but less on how these needs can be addressed through good planning and design practice. The literature revealed that when children and family needs are not considered in urban planning and development at a government level, these needs are often unable to be met due to a family unfriendly living environment, which can have detrimental effects on health. This paper makes recommendations for the design of high-density housing to meet these needs, and highlights the need for further research into good practise for high-density housing design in Australian cities, along with better integration of child friendly cities policies in urban planning and design policy.