In this paper the crystal structure, electronic structure and hydrogen site occupation of LaNi4.5Al0.5Hy hydride phase (y=5.0, 6.0) have been investigated by using full-potential linearized augmented plane wave method. The hydrogen atoms were found to prefer the 6m, 12o and 12n sites, while no 4h sites were occupied. A narrowed Ni-d band is found due to the lattice expansion, the total density of states at EF increases with y, which indicates that the compounds become less stable. The interaction between Al and Ni, H plays a dominant role in the stability of LaNi4.sAl0.5Hy hydride phase. The smaller the shift of EF towards the higher energy region, the more stable the compounds will be. The obtained results are compared with experimental data and discussed in the light of previous works.