Rare earth exchanged (La3+, Ce3+, RE3+, Sm3+) Na-Y zeolites were prepared by simple ion exchange methods. X-ray diffraction pattern and IR spectral studies show that the frameworks remain intact after exchange with rare earth metal ions. The surface acidic properties were determined by temperature programmed desorption of ammonia (NH3-TPD). H-1 MAS-NMR spectral study shows the presence of highly acidic bridging hydroxy groups in the zeolite structure. Considerable enhancement in the acid structural properties is observed on rare earth exchange. Strain induced by the bulky rare earth metal cations on the zeolitic framework has been followed by a perceptible shift in the positions of Si-29 and Al-27 MAS-NMR spectral peaks. The migration of counter cations, especially lanthanum, in the repulsive electrostatic field of sodium has been established using Si-29 and Al-27 MAS-NMR studies. The catalytic efficiency of the prepared systems was tested for the alkylation of benzene with 1-octene. Zeolite Na-Y shows very low activity due the negative influence of Na+ ions, on the Bronsted acid, centres. Rare earth exchanged forms invariably show better selectivity for the desired 2-phenyloctane formation. Catalysts are susceptible for deactivation due to blocking of the pores by alkylation products. These studies show that the rare earth exchanged zeolites exhibit better resistance towards deactivation.