Federal government policy strategies to address childhood and family disadvantage have encouraged self-reliance and self-responsibility over the past few years with a focus on making family and child friendly communities sustainable. There is the expectation that even the most disadvantaged families and communities will be able to overcome the circumstances of structural disadvantage, poverty and other deficits such as poor health and become fully functioning citizens. Such initiatives presuppose that there exist strengths and resilience within communities and families without necessarily enacting practices within the strategies to enhance people’s capacities. Action Research (AR) was an original component of the Communities for Children (C4C) Initiative and was designed to address childhood disadvantage with a focus on developing capacities in families and communities in select rural and urban regions across Australia. Although AR was not continued as a policy priority, we argue that its processes and practices can contribute to long term effectiveness, with sustainable outcomes, towards greater social justice, inclusion and overall greater standards of living for disadvantaged communities. Examples of Western Australian C4C sites, demonstrate this potential and offer suggestions for future policy direction.