There have always been youth hostels in Athens, at least as long as I can remember though some were not called hostels. They were mostly in old mansions and you had a choice of living dormitory style or having your own room. In the old days you could also stay on the roof for almost nothing and since it hardly ever rains in the summer this was a great deal. They were not the best of accommodations to say the least and you had to share the bathroom with a dozen or more people.
But if you needed
a bed (or a spot on the roof to lay out your sleeping bag) staying at a youth hostel left money for more important things like eating and drinking. There are still a few youth hostels left particularly in Athens, and also a number of pensions and hostels that are not necessarily for youths. There are also some on the islands though competition from the small family run hotels makes the hostel business less than lucrative these days. But because the number are few and the people who are on a budget are many it
may be a good idea to try to book one in advance if possible.
The most well known hostel in Athens is the Athens International Youth Hostel is on Victor Hugo street a few blocks from Omonia Square. Just on the other side of the National Gardens is the Pangrati Youth Hostel which benefits from being in a typical middle class Athenian neighborhood and still within walking distance of all the sites.
There are a number of low budget hotels some of which are former bordellos that have been coverted into hostels like the Hotel Neos Olymbos in a beautiful restored neo-classical building close to the train station. Zorbas Hostel is in Victoria Square, close to the National Archaeological Museum and the metro station. Guests at Zorbas can choose between private rooms or beds in a dormitory. The Zeus Hostel is on Sofokleous street right near the
market, also a great location just a few steps from Psiri. The Sparta Team Hotel is a 5-minute walk from Omonia and also close to Psiri. It boasts a snack bar and free Wi-Fi access throughout. Generally these hostels are pretty favorably reviewed and if you are young they are a great place to meet other travelers though the neighborhoods are not the best and you need to be somewhat careful which generally means watch your wallet and handbag and don't wander around at 3am unless you have lots of friends with you.
If you are looking for inexpensive and centrally located try the Athenstyle Youth Hostel which has rooms, suites and dormitory style rooms in perhaps the best location of Any hostel in Athens, right in the heart of Monastiraki-Psiri. The newly refurbished Pella Inn has very low prices and you can't beat the location, right on Ermou Street about a block away from the Monastiraki Metro station so you can easily get to and from the airport and Pireaus. The Hotel Tempi, a favorite of frugal travel writers is a couple blocks away on pedestrian Aeolou Street. The Dioskouros Guest House is also right in the Plaka and has cheap monthly rates for students staying in Athens for school. In terms of location these last four options are by far the best, being in the center of Athens close to restaurants, cafes, archaeological sites, museums and the metro. What is the point of staying somewhere cheap if it is so far that you have to take taxis home at night when the metro or buses stop running?
For more inexpensive hotels in Greece go to www.hotelsofgreece.com and look for the c-catagory accommodations. You can also search for hotels by rates and destination at www.booking.com/country/gr by clicking on 'show advanced options'.