The decision in the early 1990s to cut back on the building of public housing intensified the already dire shortage of affordable housing and increased the marginalisation of the sector. To be eligible for public housing, new entrants usually have to be in ‘greatest need’. This study argues that the shift in the eligibility criteria for accessing public housing means that public housing estates increasingly reflect what Loïc Wacquant calls ‘advanced urban marginality’. The article assesses whether the features of advanced urban marginality that are identified by Wacquant capture and can be usefully used to analyse the shifts and contemporary characteristics of public housing. The article draws on existing data and in-depth interviews with 33 older (aged more than 65 years) public housing tenants in Sydney, Australia, to analyse the residualisation of public housing using the features of advanced marginality identified by Wacquant – ‘wage labour as a vector of social instability and life insecurity’, ‘functional disconnection from macroeconomic trends’, ‘territorial fixation and stigmatisation’, ‘spatial alienation and the dissolution of place’, ‘loss of hinterland’ and ‘social fragmentation and symbolic splintering’. The study concludes that although Wacquant’s analysis is useful and captures much of what has occurred in public housing estates in Sydney, in many instances, public housing remains a source of pride for its tenants and provides them with the basis for a good life.