A theory is presented of the damping and frequency shift of phonons and of the ground-state energy corrections due to interactions between phonons in quantum crystals with singular forces. The technique begins with the adoption of a trial ground-state wave function of the Jastrow form, together with trial excited-state wave functions constructed to represent one-, two-, and three-phonon excitations. The Hamiltonian matrix in this restricted basis is diagonalized, and the basis is optimized by minimizing the lowest eigenvalue with respect to variational phonon parameters. Using a lowest-order cluster expansion, the unambiguous prescription is obtained that a specific effective potential, softened by the Jastrow correlation function, replaces everywhere the true potential in the existing self-consistent theory of phonon damping applicable to nonsingular forces. Close analogies are drawn with the correlated basis function treatment, of superfluid liquid helium. © 1971 The American Physical Society.