One common approach for treatment of soft clay soils is the installation of stone columns. The load capacity of the stone columns depends very much on the shear strength of the surrounding soft clay soil. The stone columns help in both reduction of settlements and accelerated pre-consolidation of clay soil deposit. However, in case of extremely soft clay soils, the stone column formation may be difficult due to lateral spread of stones. The contamination of stone aggregate by the ingression of soft clay soil may inhibit the drainage function of stone columns. The geosynthetic encasement of stone columns is an ideal solution for enhancing the performance of stone columns in such conditions. The geosynthetic encasement helps in easy formation of the stone column and improves the strength and stiffness of the columns. This paper presents the results from a laboratory based studies on the performance of the encased stone columns. The laboratory studies consisted of load tests on stone columns with and without encasement in a clay bed formed in unit cell tank. The encasement was found to significantly improve the load capacity of the stone columns. Using the tension membrane theory for analysing the hoop strains in the geosynthetic encasement, design methodology has been developed for the selection of the geosynthetic material for use as encasement.