The objective of this study was to evaluate the use of NHS money to improve health by improving housing conditions. A pilot study assessing health outcomes before and after improving housing conditions was conducted, studying 72 children with previously diagnosed asthma living in 59 damp houses in Cornwall. The intervention was the installation of central heating. This improved the energy efficiency of the housing. The children's health was a symptom-based outcome measure for asthma and time lost from school. Improvements comprised installation of gas central heating in 28/59 (47%) houses, electric storage heaters in 22/59 (37%), solid fuel central heating in 7/59 (12%) and oil-fired central heating in 2/59 (4%) houses. Energy efficiency improved by a mean of 2.1 on the National Home Energy Rating scale (95% CI 1.68-2.47, P<0.001) in the 37/59 (62%) houses for which two readings were available. Initially, 69/72 (92%) children's bedrooms were unheated and 44/72 (61%) were damp; following improvements, the proportions were 10/72 (14%) and 15/72 (21%) respectively. All respiratory symptoms were significantly reduced after intervention; the greatest reduction was seen in nocturnal cough from a median score of 3 (most nights) to 1 (on one or several nights) (P<0.001) in the previous month. School-age children lost significantly less time from school for asthma in the previous 3 months (9.3 days per 100 school days before intervention and 2.1 days afterwards, P<0.01) but not for other reasons (1.4 days per 100 school days before and 3.2 after, P>0.05). In conclusion, this study provides the first evaluation of health outcomes following housing improvements. Lack of a comparison group means that effects of age, season and biased reporting cannot be eliminated. More work is needed to substantiate these results.