There is a rapidly developing interest in the creative use of information, instrumentation and communications technology for the nonconstrained monitoring of physiological and health variables at home. Evidence for this interest are major research programs in Europe, such as the Technology Initiative for Disabled and Elderly People (TIDE), and the European Prototype for Integrated Care (EPIC), initiated under the general umbrella of the Advanced Informatics in Medicine (AIM) program which has as a major theme the application of Telematics Systems in Health Care. Here, the authors discuss the design and implementation of instrumentation modules for monitoring the interaction between the elderly participant and his or her living environment to assess changes in functional health status. The objectives of the first data collection phase are to develop individualised templates of functional health status and to use knowledge based systems to identify changes which may indicate a deterioration of health and a reduced capacity for coping with the demands of day to day living. This is a major interdisciplinary study involving biomedical design engineers, computer scientists (medical AI) and community medicine specialists. Preliminary data are presented on the results of a small pilot project and a major field trial involving over 75 households.<<ETX>>