The principal aim of this approach is to develop a detailed microscopic theory of nucleation using density functional theory. We will implement a perturbational density functional approach using a direct expansion of the density and optimise a Helmholtz free energy functional. Hence we will characterize the critical nucleus from which nucleation occurs. We will construct the free energy functional from thermodynamic perturbation theory, and calculate surfaces of free energy as a function of pressure and the number of particles. A direct comparison with the experimental rates of nucleation is possible for many simple atomic and molecular materials. An alternative approach based explicitly on the potential energy surface will enable us to compare the predicted rates. Nucleation is of great importance in processes ranging from catalysis to atmospheric chemistry and so there should be a variety of applications for our results.