Internal erosional behaviour of a lignosulfonate-treated dispersive soil has been studied using apparatus designed and built at University of Wollongong. The effectiveness of lignosulfonate-treated dispersive clay on its erosion resistance has been investigated and its advantages over traditional admixtures (cement) have been presented. Lignosulfonate is a non-toxic admixture that can stabilise certain erodible and dispersive soils effectively, without causing any adverse environmental impact on the ground unlike some traditional stabilisers. Test results show that the erosional parameters such as critical shear stress and coefficient of soil erosion are improved with the increase in the amount of lignosulfonate. Knowledge about the clay particles and lignosulfonate interaction mechanisms is pertinent for long-term environmental sustainability of treated soils, a factor which is poorly understood at microscopic level. Considering this, X-ray diffraction, and Fourier transform infrared spectroscopy, scanning electron microscopy and energy dispersive X-ray spectroscopy were carried out on representative samples to understand the stabilisation mechanism at the particle scale level. The improvement of performance exhibited by the lignosulfonate-treated soil can be mainly attributed to the reduction of the doublelayer thickness by the neutralisation of surface charges of the clay particles and the formation of more stable particle clusters by polymer bridging.