Bedding And Litter
Bedding
Great care should be taken when selecting bedding and litter for a rat cage. Always make sure you change the bedding and litter regularly, to prevent the build-up of ammonia and bacteria, which can and will be harmful to a rat's respiratory system.
Avoid cedar and phenol containing materials (such as pine) as these can cause health problems. The phenols have been shown to be toxic to small animals over time and it's not worth compromising your rat's health by using any of these.
Wood shavings are Ok, but not ideal, to line the bottom of the cage with. Make sure it is shavings rather than sawdust, however, as fine sawdust can cause eye and nose irritations.
Natural fibre may also be used as a warm bed lining for rats.
Peat (or the peat substitutes) is often used as absorbent base materials for the cage floor.
Cotton wool or the cellulose fibre materials can lead to digestive obstructions if eaten and sometimes can become trapped around legs and act as tourniquets.
Shredded paper/newspaper could also be used. Nowadays, most newspapers are printed using non-toxic vegetable ink, so should be safe enough. You can even buy a cheap shredder and shred your own, rather than buying pre-shredded shop stuff. This can be one of the cheapest ways to get bedding for a cage, and can be changed regularly when it starts to get wet and stinky. Be warned though - the rats may prefer this in their house as to on the floor and gather it all up, leaving the floor empty!
Old towels and t-shirts also make good bedding. They are specially useful for a hospital cage, as they retain warmth better for any ailing rats. Also useful if you find your rat appears to be over sensitive to other kinds of bedding. Very handy, too, as they can be "recycled" with a quick run through in the washing machine. Just make sure they don't get any lose threads or holes where rats can get stuck.
Litter
Clay based cat litters are probably a big no no. They can be pretty dusty, which will irritate a rat's eyes, nose and lungs. You can, however, find relatively non-dusty types if you shop around.
Carefresh Cat litter makes quite a good bedding/litter in a rat cage. It is made from recycled paper and is relatively non-dusty. It could be used either for the whole cage floor or in a litter tray. It can, however, start to give off a slight whiff once wet.
Bob Martin's Recycled Paper Based litter could also be used. It can be a bit dusty, but if you have an old sieve/strainer/colander you could shake it through that first, before putting it in the cage.