In the era of climate change, devolved evolution and diminishing natural reserves it is imperative to develop green residential neighbourhoods targeting middle and low-income brackets. The contemporary urban design is one of the key instruments of physical transformation employed to enhance urban quality, achieve sustainable urban environments and create urban places for all people. The sustainable urban design takes into account all major principles of contemporary urban design but emphasizes on the issue of symbiotic relations to the surrounding areas. It addresses issues such as integration with the natural environment, providing friendly pedestrian and cycling environments, promoting quality sustainable building design, and ensuring energy efficiency, thermal comfort, water conservation and reuse of waste. It also focuses on social interaction and accessibility for all income groups. The sustainable urban design is one of the key tools applied to plan and develop new green residential neighbourhoods and districts. A green residential neighbourhood has to be located along a rapid transit corridor and fulfil all the requirements that are necessary for the functioning of a contemporary sustainable community. A cursory review of three case studies in Denmark, Sweden and Singapore revealed that creating fully sustainable residential communities is possible through sustainable urban design and development, political will, community awareness and coordinated project management. Nevertheless, the current political climate strongly influenced by neoliberal policies triggering property led development is the main challenge for further development of affordable green residential neighbourhoods. Overcoming that challenge is one of the key tasks facing decision makers, urban planners and designers. Ensuring mandatory passive sustainable design for all residential buildings and sustainable urban design principles for entire residential neighbourhoods is the only way to achieve physical, social and economic desired green environmental outcomes.