Dihaila Lake is an irrigation Lake constructed in Karera Bustard Sanctuary Mahya Pradesh India with a water spread area of 420 ha at\ FRL receiving water from a huge catchment area of about 446 sq. km. The Lake has been identified under National Wetland Conservation program by Ministry of Environment and Forests (Govt. of India). The Lake supports a rich biodiversity including fishes, birds, reptiles and Mammals. This Lake supports the fish biodiversity include some importance fish species from conservation point of view. A large number of water birds visit the reservoir during winter season. Both these features make the Lake a biodiversity hotspot and need a systematic conservation strategy. The most positive aspect of the Lake is its catchment area which is predominantly forested and most of it is covered under Karera Bustard Sanctuary notified under Wildlife Protection Act 1972 of Govt. of India. Similarly, the migratory birds also visit the reservoir during winter season. The present paper deals with various types of habitats available in the Lake and its surrounding area. The mosaic of habitats makes it a unique avifaunal refuge. Protected catchment area is also a supportive feature for the conservation of bird species. The paper discusses in detail the aquatic habitats available in the Lake, their biological features (presence of macrophytes and benthos), habitat utilization patterns of birds and conservation aspects.