Erect the bird house in an area which is as far away from any tree trunk, branch or rooftop as possible. Squirrels can easily climb any of these and jump onto a nearby bird house. Erect the feeder at least eight feet from any tree trunk, branch or rooftop.
Put nyjer (thistle) seed in the birdhouse. Squirrels won't touch this and the birds will be able to eat undisturbed. Nyjer can be purchased at a pet store.
Place the feeder between two "baffles", umbrella-like covers which fit above and below the feeder and can prevent the squirrels from reaching the feeder. The disadvantage of these baffles is that the birds can't be observed while they're eating, an annoyance for people who are putting in the bird houses specifically because they want to bird-watch. Baffles can be purchased at home and garden stores.
Erect the feeder using a PVC pipe. Squirrels can't climb on the PVC pipe, as it's too slippery. PVC pipes are available at building supply stores.
Set up the bird house and surround it with a grid of vinyl-coated wire. Squirrels are not able to climb on the vinyl coating or hold on if they jump from something else.