The economic development in China and the rising of the living standard need to speed up the urbanisation. The development of small towns is an important way to Chinese urbanisation. Land use plays a very important role in the development of small towns. However there are many problems in the development of small towns, esp. in land use. The paper first discusses the land problems in the development of small towns. Such as much cultivated land lies idle, under utilization and waste of land, increasing illegal use of land, unstable contractual relationship for land use. The relationship between the development of small towns and land use is also studied. Then the guidelines for the land system innovations of small towns are put forward. Namely the sustainability of social and economic development, the balance between land reservation and land utilization, the provision of service to village, agriculture and farmer, the management of land resource and land assets, the parsimonious and legal use of land. The basic framework of land system innovations of small towns is put forward finally. It include the land replacement policy for small towns and the permanent tenancy of farmland, the overall plan for land uses and other plans in harmony, the establishment of a flexible system of land supplies, using land with payments, the transfer of agricultural land and refining the land law related to the construction of small towns.
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