Crate training can be an efficient and effective way to house train a dog. Dogs do not like to soil their resting/sleeping quarters if given adequate opportunity to eliminate elsewhere. Temporarily confining your dog to a small area strongly inhibits the tendency to urinate and defecate. However, there is still a far more important aspect of crate training.
Crate training works like this: your puppy is in that crate at all times unless she's sleeping, eating, outside with you, going to the toilet, or being played with active supervision. You'll need to be consistent, or else it won't work. You can't let your puppy wander off through the house unless you're focusing your complete attention on her. If you allow her access to the house before she's thoroughly house trained, you're basically encouraging her to relieve herself inside - and remember, each time she does this, it'll be easier for her to do it again (and again ... and again ...)
Sample schedule of a morning's crate training:
7am: Wake up. Puppy comes outside with you for a toilet break.
7.25: Breakfast time.
7.45: Back outside for another toilet break (accompanied by you, of course.)
7.50 - 8.45: Play-time! Puppy is out of the crate being actively played with, cuddled, etc.
8.45: Outside for another toilet break.
8.50 - 11: Puppy goes back in the crate for a nap
11 am: Puppy comes outside with you for a toilet break.
11.05 - 12.30: Playtime! Puppy is out of the crate being played with and petted.
12:30: Lunch time.
12.45: Puppy comes outside with you for a toilet break.
1 - 3.30: Puppy goes back in the crate for a nap.... and so on throughout the day.
Crate training should not be abused, otherwise the problem will get drastically worse. The crate is not intended as a place to lock up the dog and forget her for extended periods of time. If your dog soils her crate because you left her there too long, the house training process will be set back several weeks, if not months. As the puppy grows older, you can begin to reduce the amount of time spent in the crate but beware of doing this too soon!