Hydrogen absorbing alloys expand and contract 20-30% in volume with hydrogenation and dehydrogenation, and this process causes defects in the alloy lattice. Studies on LaNi5 with in-situ x-ray diffraction and Rietveld analysis in combination with TEM imaging has demonstrated that the first hydrogenation reaction introduces a huge number of dislocations to the lattice but without a change in crystallite size. We also found that when a small amount of Ni in LaNi5 was replaced by other elements, the strain introduced during the first hydrogenation could be reduced or eliminated but different type of strain is introduced in the two-phase region. We have developed new hydrogen absorbing alloys with the BCC structure. The hydrogen capacity of these alloys reaches to almost double of conventional LaNi 5. As shown by TEM, the alloys exhibit a developed BCC modulated structure, with the width and thickness of each phase being 100-200 nm and about 10 nm, respectively. We propose that the strain through the coherent boundary in the modulated nano-order structure confers more hydrogen capacity upon these materials compared to those without a modulated nano-structure.