Following-on from where Infinity Welcomes Careful Drivers let-off, Lister, Rimmer and the Cat have discovered a cache of 'Better Than Life' headbands in one of the sleeping quarters.
All four live out their ideal fantasies until Rimmer's massive self-loathing causes his subconscious to rear its ugly head and rebel, which had built up his life only so that it can bring him down later.
During their escape the two are caught by a bailiff who repossesses Rimmer's body, as although he previously had had wealth beyond compare, for tax reasons it had saved a few dollar-pounds to hire it.
Following a prison break with his cell mates, he ends up trapped with a pair of violent criminals and transferred into the body of a female prostitute.
Fortunately there is a cop present who has witnesses the scene, and, gun drawn and stood prone behind the hood of his car, tells the would be pimp to leave the lady alone.
One by one as he catches up with them, his subconscious wreaks havoc on their idealised fantasy lives until eventually they all want to escape; Rimmer's arrival in Bedford Falls (Lister's hometown based on the setting of his favourite film, It's A Wonderful Life) via juggernaut destroys the town and prompts his wife Kristine to leave him and take their twin boys with her.
Once back in the real world, Rimmer and Kryten leave Lister and Cat in the infirmary to recuperate, the two near-starved and suffering from extreme muscle atrophy after almost two years of near-inactivity while in the Game.
Kryten, not wanting to be too presumptuous, allows Rimmer to look into the sci-scanner, before explaining that there is a planet on course to impact the Red Dwarf ship, which without the engines online would be unable to manoeuvrer out of the way.
The work to reactivate the engines progresses ahead of schedule until Rimmer makes a catastrophic mismanagement decision, which leads to several teams of scutters being crushed meaning they do not have enough workers to complete the task.
A shape-shifting, emotion-stealing mutant known as a polymorph is able to sneak on board the ship, draining Lister of his fear, Cat of his confidence, Kryten of his guilt and Rimmer of his rage.
Eventually the emotionally handicapped crew are able to defeat the Polymorph, but the abrupt restoration of his fear causes Lister to die of a heart attack.
The game arrives among other fantastic packages in a post pod, which is encountered after Red Dwarf turns around to head for home.
It is part of a series of "VR total immersion video games", which work by inserting electrodes into the user's frontal lobes and hypothalamus.
He then placed himself in a scenario where all his stocks abruptly crashed, he lost all of his money, his body was repossessed, and he was forced to occupy a female prostitute's body, then dragged into hiding from the law, experiencing verbal, physical and sexual abuse at the hands of violent criminals, and finally pimped out by them, as well as coming to realise that his idea of the perfect woman – the woman he was in fact engaged to – was the spitting image of his own mother.
The final level was set aboard an improved version of Red Dwarf featuring fresher food, more comfortable clothing and the revelation that Rimmer, Kochanski and Petersen survived the cadmium-II blast in stasis.
For his novel, Doug Naylor renamed it Last Human and set it onboard Starbug featuring Kristine Kochanski as a new crewmember.
Grant's Red Dwarf novel, Backwards, released in 1996, would be a direct sequel to the ending of Better Than Life with the beginning consisting of the crew waiting for Lister at Niagara Falls.