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Village households mainly depend on wood and cow dung and other bio mass sources to meet their energy requirements. The negative impacts on the dependence of such sources as fuel pose a great threat to the environment. Due to deforestation, wood is becoming scarce and its price is increasing at a fast rate. Use of other biomass sources for heating in a primitive way pose a great threat to the environment as well as on the general health of the rural people. Majority of the rural masses do not adopt scientific and efficient methods to harness energy from these bio mass sources. Governments in the developing and under developed countries are trying hard to tackle these important issues. Also Bangladesh as a developing country is facing serious energy crisis due to depleting gas reserves and lack of proper utilization of the available resources for energy. With the acute shortage of gas, Bangladesh government is inclined to install coal fired power stations to generate electricity which can be supplied to the grid areas. Nearly 65% of the people live in non grid areas and have no access to the grid electricity [1]. Although solar home system (SHS) is getting popular in the non grid areas of Bangladesh, however per unit cost of such electricity is extremely high (nearly 40 taka i.e. 50 cents). Poor households cannot afford to buy such an expensive system. Soft term loan is being offered to the rural people to popularize the SHS, however response of the rural masses to adopt such system is a bit sluggish. Due to high investment associated with SHS, this paper focuses on community based biogas project which would provide sustainable solution for the energy crisis existing in Bangladesh. This paper also highlights the environmental and socio-economic aspects of biogas plant in a small community/village. Also an effective model to develop and run a bio gas plant has been suggested. [ABSTRACT FROM PUBLISHER]