The Government of Honduras included in its five-year plan for 1979-1983 the improvement of water supply and sanitation for up to 75 percent of its rural population. The USAID Mission in Honduras, in keeping with a long history of U.S. assistance in Honduran water and sanitation projects, executed a loan agreement with the GOH to undertake the rural Water and Sanitation Project. In accordance with the Mission's request, the work was carried out in two phases. This report describes the Phase I work carried out under order of technical direction 29.