This regional working paper explains the new degree of urbanisation. This new classification of local authorities into (1) cities, (2) towns and suburbs and (3) rural areas. Eurostat uses this classification to produce a wide range of indicators, including poverty, employment, educational attainment and ICT use. In the period 2014-2020 period of Cohesion Policy this classification will be used to provide a spatial breakdown of expenditure. This classification is based on a new tool: a 1 square km population grid. This improves the accuracy as each grid cell has the same area size, while using local authorities differ widely in area which distorted older methodologies. Due to these distortions, older methodologies sometimes misclassified cities as rural areas and vice versa.