Clay liners are provided in waste landfills to prevent the leachate from percolating into underlying soil and ground water and polluting it. Hence, soils used as landfill liners must possess low hydraulic conductivity ( 10-7 cm/s). In the initial as-compacted state, the clay liners satisfy this design criterion. However, in the field the compacted clay liners are susceptible to volumetric deformations due to seasonal moisture fluctuations, which alter their properties from their as-compacted state. Also, in the field there is a constant interaction between the leachate and the liner materials, which results in an osmotic gradient between the soil pore water and the external reservoir. Osmotic flow of water molecules and diffusion of salts occur in response to this osmotic gradient, which alters the physico-chemical behaviour of the compacted clay liners, which in turn further affects their hydraulic behaviour. Further, the availability of natural soils meeting the guidelines is an issue at many landfill sites. Thus, it becomes essential to modify the available local soils with bentonite to meet the liner criteria. The present study was carried out on a locally available red soil mixed with 10% and 20% bentonite by dry weight so that it satisfies the requirement of hydraulic conductivity in the as-compacted state. Laboratory wet-dry tests were conducted using DW, 0.4M NaCl and 0.4M CaCl2 solutions as the inundating fluids on identical specimens compacted at optimum moisture content to its maximum dry density. The we-dry tests were carried out under a surcharge load of 12.5 kPa. Upon attainment of maximum swelling, the hydraulic conductivity tests were conducted at swollen state under a hydraulic gradient of 20. The soil specimens were then dried at a temperature of 45 ± 2 ℃. The weight, height and diameter of specimens were measured continuously during drying to study the shrinkage behaviour of the soil. The dried specimens were subjected to subsequent wet-dry cycles until the specimens reached an equilibrium state and the hydraulic conductivity was determined after each wetting cycle. The hydraulic conductivity was observed to increase with wet-dry cycles, especially for specimens inundated with salt solutions due to changes in the microstructure in the soil. The change in the microstructure was analyzed by capturing the SEM images in the as-compacted state and at the end of different wetting cycles.