Just open: the West End hotel where room for a night is £20

This hotel cost millions to build, is only eight minutes' walk from Oxford Circus and has all the facilities a modern tourist expects - yet a bed there starts at less than £20 a night.

Converted from a derelict office block, London's newest youth hostel has set a new benchmark for budget accommodation.

The Bolsover Street hostel, which cost £4.3 million to build, has been fully booked since it opened earlier this month.

It has 294 beds in 59 rooms, almost all of which are ensuite. Facilities include a bar and café, self-catering kitchen, internet access, luggage storage, travel desk, shop and laundry.

Prices start at £18.95 for adults, £14.50 for under-18s and £40.95 for a family of four.

The tariff even beats Sir Stelios Haji-Ioannou's easy hotel chain, which charges from £25 for a basic room at its branches in Earl's Court, Victoria and Kensington.

Other hotels in the area charge at least four times the Youth Hostel Association's family room price.

The Grange Fitzrovia Hotel, also in Bolsover Street, charges £79 for an ensuite double room while a similar room at the Astor Court Hotel in nearby Hallam Street costs £88. A double at the Charlotte Street Hotel costs around £240 a night.

A YHA spokesman said: "We're always looking to put great facilities in great locations. Bolsover street is just a few minutes away from Oxford Street and a short walk from Soho.

"It's got excellent transport links and is useful for getting anywhere in London.

"The actual hostel is safe, comfortable and superbly equipped and has excellent rates. Its design is not something people would usually expect of a youth hostel."

The hostel is the seventh to open in London, joining others in Earl's Court, Holland Park, Oxford Street, St Pancras, St Paul's and Rotherhithe. The project, which took 18 months to complete, is part of the YHA's £13.5 million scheme to rebrand its properties in England and Wales.

London design consultancy Blacksheep, which was responsible for creating the hostel's interiors, is to revamp up to 37 YHA properties around five themes: city, coastal, country, activities and heritage.

A further two new properties will open in Sussex in early 2009, while the first batch of 11 upgrades are now nearing completion. These range from very modern locations through to old mansion houses and converted mills.