The invention discloses a low cost hydrogen storage alloy which is AB5 type alloy with the general formula of Laa M(1-a) Nib Coc Mnd Ale Cuf, wherein M is at least one in Ce, Pr, Nd, Pm, Sm, Dy, Y, Zr and Ti; a, b, c, d, e and f represent mole ratio with the number range: a is more than or equal to 0.3 and less than or equal to 0.8, b is more than 3.6 and less than or equal to 4.1, c is more than 0 and less than or equal to 0.15, d is more than or equal to 0.3 and less than or equal to 0.65, e is more than or equal to 0.04 and less than or equal to 0.35, f is more than or equal to 0.3 and less than or equal to 1.0, and the sum of b, c, d, e and f is more than or equal to 5.1 and less than or equal to 5.35. The hydrogen storage alloy has CaCu5 crystal structure, and the ratio (c/a) of lengths of c axis and an axis of the CaCu5 crystal structure is more than or equal to 0.81. The invention also discloses a preparation method of the hydrogen storage alloy as well as the application thereof in negative pole material of a nickel-metal hydride battery. The hydrogen storage alloy has low cost, good activation performance, large discharge capacity and long cycle life.