A major challenge for urban Australia and its fast growing cities in particular is the provision of an adequate supply of appropriately located, affordable and sustainable housing across a range of dwelling types. A related challenge involves attempts by the metropolitan planning agencies in the capital cities to restrict residential sprawl and deliver more compact cities. Residential infill in the established suburbs has emerged as one of the principal urban planning policies designed to address this dual challenge. Infill targets, typically in the 50–70 per cent range, are now integral to all capital city planning strategies. This article examines the current pattern of infill housing development in Melbourne, Australia's second largest and fastest growing capital city. It highlights the existence of two infill segments—brownfields and greyfields—each with distinctive patterns of development that need to be better understood if urban regeneration is to figure significantly in delivering more liveable and sustainable cities. Current urban policies, programmes and practices are lacking an effective response to redevelopment of the greyfields.