Poverty everywhere involves people experiencing various degrees of material deprivation; the concept of poverty is used to cover a wide ranging set of interrelated life chances that are valued differently in the diverse cultures and traditions of the world. Despite the “rich” natural endowment and diverse environmental potential of the country like in several other developing countries, poverty is a major social and economic problem in Ethiopia. Although poverty reduction has become a central global agenda, there is still an ongoing debate on the policies that would help to attain the objective (Cashin et al, 2001). There is a consensus that the main objective for development efforts is to reduce poverty, which can be accomplished by economic growth and/or by an active policy of income redistribution. For thinking about appropriate forward-looking anti-poverty interventions the critical need then is to go beyond a cataloging of who is currently poor and who is not, to an assessment of households’ Vulnerability to poverty.