This report was written in the context of the special session of the UN General Assembly on the successes and failures of the Habitat Agenda. It analyses the rhetoric of empowerment and examines whether these strategies have led to real improvements in people's lives. It was agreed at the Second UN Conference on Human Settlements (Habitat II) in 1996, that sustainable urban development can be achieved if poor people are able to assert their own rights, and organise themselves to provide their own services and infrastructure. Successful urban governance depend on people power. Definitions of 'partnership' are discussed, and it is argued that partnership for good governance and poverty reduction involves poor people participating with government in policy and decision-making as well as contributing to implementation and costs. However, the privatisation of services, and lack of real decentralisation of powers to city governments, present challenges to meaningful partnership for sustainable urban governance. The report is illustrated with examples from around the world, particularly Bolivia, Kenya, Brazil and Sri Lanka.