The construction industry is continuously seeking sustainable alternatives to conventional building materials. Alkali-Activated Cellular Lightweight Binder Blocks (AACLBs) present a promising solution by utilizing alkali activation technology to augment the properties of lightweight concrete. This research focuses on optimizing the composition of AACLBs by replacing conventional binders with alkali-activated materials derived from industrial by-products and agro waste with the help of a protein based foaming agent (FA). The industrial waste materials investigated include Fly Ash (F) and Blast Furnace Slag (BFS) while agro waste such as Rice Husk Ash (RHA) are considered as sustainable alternatives. With Sodium Hydroxide (NaOH) and Sodium Silicate (Na2SiO3) as activators, 8 different combinations are adopted in this study. Properties such as density and compressive strength (CS) are analyzed to assess the structural capabilities of the AACLBs and are compared with that of cement-based blends. The alkaline solution to binder ratio is kept constant as 2.5 for two dilution ratios (1:30 & 1:60) and ambient curing is adopted. The target densities for conventional cement-based mixes are set as 1200–1600 kg/m3 and 1500–1800 kg/m3 for alkali-based mixes. The findings show that, the highest CS of 42.76 MPa and a density of 1870 kg/m3 is observed for FB1 combination at a dilution ratio of 1:30. Conversely, the FBR2 combination at a dilution ratio of 1:60 yielded a CS of 21.23 MPa, accompanied by a minimum density of 988 kg/m3.