A system for housetraining pets through the use of separated sleeping and waste areas contained within a pet cage. The cage encloses a waste tray section that runs along the floor of the cage, which holds an absorbent pad, secured by improved retention clips, for collecting pet waste that can be removed and replaced when soiled. A bedding area made of up a rectilinear frame covered in bedding material is raised above the floor of the cage by engaging frame extensions with perforations in the exterior of the cage. The system and associated method serve to aid in conditioning a pet for proper housetraining while the pet is confined to a cage.