ABSTRACT: The necessity of in-situ treatment of foundation soil to improve the bearing capacity has increased considerably due to non-availability of good construction sites. Soil confinement is one such method of soil improvement which can be economically adopted. The improvement in bearing capacity and reduction in settlement of footings resting on clay due to the addition of a laterally confined granular soil layer underneath, is investigated by carrying out a series of finite element analyses using the FE software PLAXIS 2D. The influence of parameters like radius, depth etc. of laterally confined granular soil layer is studied. It is observed that the load-settlement behaviour of isolated footings resting on clay can be considerably improved by providing a laterally confined granular soil layer underneath it.