The oxidation ditches developed by Pasveer of Holland and Muskat in Germany have been used in small communities for many years as a cost effective secondary treatment. Generally designed and operated as part of an extended aeration system, these plants provide from 18 to 30 hours of hydraulic detention time, followed by a 3 to 6 hours settling period in a secondary clari-fier, with 100 per cent of settled solids return to the aeration tank. Because of these design criteria, the oxidation ditches were not widely used in large populations as the aeration system normally used required a relatively low water depth to be efficient -a fact that meant extensive land areas. Recent innovations in the clarification and aeration systems have rendered this treatment attractive again for communities of all sizes. The use of an upflow intrachannel clarifier, in particular, eliminates the need for a separate secondary clarifier, and return sludge pumping and piping. In addition, an innovative diffused aeration system permits the use of channels with a greater water depth, which not only optimizes process as an oxidation ditch but also makes it remarkably competitive in respect to conventional biological treatment systems. This paper deals with this innovative oxidation ditch system, analyzing its conceptual design considerations and economic aspects, and commenting upon its first application in Argentina using low-cost construction technology.