Urbanization brings many changes in urban land‐cover composition. It generates the need to quantify the effect of increasing population on urban environmental quality that can draw together the relationship related to various land covers. The present scenario of urbanization in India poses challenges for sustainable development, which requires scientific vision about the existing scenario and relationship among various factors for careful planning. In this research, an attempt was made to understand the physical interrelationship of man‐made as well as natural environment at the micro level of Dehra Dun urban area using IKONOS satellite imagery. A detailed study was carried out on representative wards of different characteristics within Dehra Dun Municipal Corporation. For this purpose, six wards were selected considering various parameters including type of development (old/new), population density and land use. On the basis of surface functional characteristics, land‐cover composition was classified under man‐made hard surface, green cover and soft surfaces including playgrounds, lawns, barren land, etc. The results showed that the proportion of various surfaces is similar in different wards of varied densities. The ratio of area under soft surfaces is about 50% and green cover is about 25% of the hard surfaces. An accurate characterization of the surfaces allows reliable relationships to be established and increased understanding of land‐cover composition at the micro level, which provides scientific support and visualization for the sustainable development of the city.