With a view to evaluate the effect of different chemical additives on the efficacy of urea, a green house study was conducted with wet season rice (Oryza sativa L.) as test crop. The results showed that compaction of phosphogypsum (PG), diammonium phosphate (DAP), ZnSO4, NH4Cl or KCl with urea increased the rice yield and N use efficiency as compared to that obtained with straight urea. A significant positive correlation between potential N loss (measured by soluble N in floodwater) and NH3 volatilization (measured by forced air draft system) was observed. The results clearly indicate that N use efficiency can be increased through suitable modification of urea by compacting it with acid and non-acid producing fertilizers such as NH4Cl, KCl, ZnSO4 and DAP or industrial byproduct like phosphogypsum.