In ceramic industries, lime or calcium oxide (CaO) has been used successfully to improve the permeability of materials made from clay. This paper presents the outcome of research into the possible use of mud mixed with lime to improve the quality of mud bricks for use in lining of furnaces in the foundry. Results of the tests show that mud generally consist mainly of very fine clay and silt particles sizes less than 300 µm. It was also found that the addition of lime in mud improves the permeability with an average conductivity of 1.15 mm/s. The addition of lime also reduces the resistance of the mud to thermal resistance as the samples indicated cracks at high temperatures. The compressive strength and setting time of the mud- lime brick was found to increase progressively. The addition of lime to mud can therefore be recommended for low temperature furnace lining.