Over the past 30 years, urban policy in Brazil has undergone a major transformation, both in terms of regulatory frameworks and the involvement of citizens in the process of policy-making. As an intense process of institutional innovation and mobilisation for decent publicservices took place, academics started to consider the impact of institutionalisation on the autonomy of social movements. Using empirical evidence from a city in the northeast of Brazil, this article addresses the wider literature on citizen participation and social movements to examine specifically the problem with co-optation. I examine the risks linked to co-optation, risks that can undermine the credibility of social movements as agents of change, and explore the tensions that go beyond the ‘co-optation versus autonomy’ divide, an issue frequently found in the practices of social movements, in their dealings with those in power. In particular, this article explores the learning processes and contentious relationships between mainly institutionally oriented urban movements and local government. This study found that the learning of deliberative skills not only led to changes in the objectives and repertoires of housing movements, but also to the inclusion of new components in their objectives that provide room for creative agency and which, in some cases, might allow them to maintain their autonomy from the state.