In resource poor countries such as Nepal, child labour cannot be totally eliminated. However, the severity of exploitation of children in labour situations can be reduced through political commitment and conscious efforts by the government to regulate the norms and conditions of employment of children in the formal and non-formal sectors. Children internally displaced by the conflict require special attention in this respect. These children have been separated from their homes, families and schooling, and forced to seek refuge in difficult urban environments. Children’s entry into the urban labour force is for many the only alternative to the risks of remaining in areas of conflict and as a consequence, they become highly susceptible to exploitation.