A simple and general method has been developed for the synthesis of various 3,4-dihydro quinazolinone derivatives by the treatment of an aldehydes with excess equivalent of urea in ethanol affords Arylideno-bis-ureas 1 which on condensation with p-amino benzoic acid in acidic medium cyclised to 4-aryl-6-hydroxy-2-oxo-3,4-dihydroquinazolines 2. Reaction of 2 with benzoylchloride in 10% NaOH results in 1-benzoyl 4-aryl-6-hydroxy-2-oxo-3,4- dihydroquinazolin-2(H)-one 3. The structures of the compounds were characterized by elemental analysis, IR, 1H-NMR and 13C-NMR spectra. Compounds 3 have been evaluated for their analgesic and antibacterial activity.