The unit group was composed of 74 babies who entered the units between April 1986 and August 1987. The comparison group consisted of 33 similarly-aged children, two-thirds of whom were cared for by members of the extended family and one-third by social services foster parents. The children's development was monitored using the Griffiths Mental Development Scale, which provides developmental norms for locomotor, social, linguistic, fine motor coordination, and cognitive development over the first 2 years of life. The findings confirmed that the basic development of unit babies is normal and healthy, consistent with unit efforts to provide good health care, nutrition, cleanliness, and clothing. Findings suggest that the babies benefit from intimacy with their mothers and the variety of social contact with other babies and adults afforded by unit life. The confining quarters, however, are somewhat detrimental to the children's development. When planning physical facilities, staff specialties, and daily regimes in the units, attention should be given to freedom of movement and exploratory play. 12 references.