Architecture: Have I been here before?

At the age of 86, Mrs Reeves started losing it - her purse, the support of family and friends, her mind - so Social Services put her into a terraced house in Tyneside, Newcastle. The house was newly done up by her landlords, the local authority, and she chose her own wallpaper and curtains.

The Dementia Care Initiative, a charitable trust set up by people who care for the elderly, aims to keep old people who are unable to live on their own out of institutions like NHS nursing homes. They call it "normal homes in a normal street" and try to keep clients to their own routines, even though this is very labour intensive. Carers work 24-hour shifts, they don't live in and have to learn to act like visitors - not answering the phone or talking over their clients' heads.

Mrs Reeves shared her living room and kitchen with one other OAP. When Mrs Reeves became agitated and asked to "go home as Mam's waiting for me", the carers took her for a walk to show her that the houses in her area had been pulled down. On the way home she bought some mints and apologised. A year later, when she was hospitalised, she asked to return home - by home, she meant the supported terraced house. But nursing care for bed- ridden patients isn't on offer in any of the five houses, bungalows and semis managed by the Dementia Care Initiative, so she died in hospital. A support worker adopted her cat.

Now the project is up for a National Housing Award. Tomorrow Frank Dobson, Minister for Health and Social Services, will hand out awards for achievements in housing and community care. Up against more fashionable drug and alcohol addiction treatment centres, the Dementia Care Initiative won't win the Roy Griffiths Award for keeping people with special needs off the streets and out of institutionalised care. Nor does it deserve the prize. There is an argument for not locking up the elderly who can no longer live alone in what are euphemistically called "homes", but it is an old-fashioned one.

The elderly and infirm need purpose-built buildings. Lots of them. By 2031, over 41 per cent of Britain will be over 50. Stairlifts whizzing up and down Victorian stairs don't make a house wheelchair friendly. Nor does one-to-one intensive care 24 hours a day make a pair of elderly strangers co-habit happily. One kitchen shared between two connected homes and used by eight inhabitants can cause strife.

"We learn from our mistakes," former nurse and director of DCI Rani Svanberg admits. "At Tyneside, where four flats offer ten tenancies, we thought that all we needed to install was grab rails, bath adaptations and a stairlift for wheelchairs. But even though everyone has their own bedroom, the residents need two separate sitting rooms. So now we are raising money to put on a conservatory."

But even an old people's sun lounge won't make up for the fact that there isn't enough space for the restless and agitated pacing of some Alzheimer's sufferers.

Holistic architecture actually heals. So says the new evidence, presented last week to the NHS Trust which funded it, by the head of architecture at Sheffield University, Dr Bryan Lawson. Daylight, gardens, views and comfort all help patients feel better. No surprises there, but nobody expected the data to reveal that modern conditions in a new environment not only made patients feel better, but in some cases actually get better.

A psychologist as well as an architect, Dr Lawson calls this evidence of the need for a feel-good factor in modern architecture the "phenomenon of psychological transference". He has medical evidence to prove it, though he won't release it until the NHS does. The Sheffield university team compared old and new architecture in both an acute general hospital and a psychiatric ward. "We were told by experts in the field that asking patients who were ill about the architecture of hospitals was a waste of time. Far from it. They were very articulate."

More important than the colour of the walls is control of the environment. Turning off lights, opening windows and controlling noise levels are all vital to patients' well-being.

In the pounds 4.2m NHS Newhaven Downs House near Brighton, designed by Greg Penoyre and Sunand Prasad, the light switches and plug sockets are at wheelchair level. The pair glory in their Utopian vision and commitment to the public good, and they enjoy working for the public sector. This is immediately apparent in the light-filled entrance to the nursing home, with its capacious club chairs in warm colours.

"Although we did use colour carefully to activate and calm the space - blues in the quiet rooms, yellow in the entrance - far more important to us is the manipulation of space and light, the physicality of the space," Greg Penoyre says. "Only when I took a bunch of people with special needs on a week's walking holiday in the Lake District did I learn how you inadvertently trouble them by crossing their space. Autistic people are terrified of being cornered."

The architects worked shifts with the elderly and infirm at Tooting Bec hospital to come up with a detailed design that orientates the disoriented.

There are no stairs because Penoyre and Prasad nestled the two-storey nursing home into the slope of the South Downs, so both levels have immediate outside access. And there are no long corridors because they grouped 56 bedrooms in L-shaped blocks around gardens. These configurations break up into small corridors wide enough for two wheelchairs. Each ends with a view. All along the corridor the doors to individual bedrooms are set in bays and painted in calming blues and soft yellows, creating colourful little niches where anyone running out of puff can pull up for a rest.

"An infirm person may take ten minutes to cross a corridor in which trolleys and wheelchairs are moving, so we made these entrances wide enough to stop by for a chat, and set shelves in the bays so that the occupant of each bedroom can put out their personal belongings if they wish," Greg Penoyre says. "This helps them with orientation."

So do the handgrip rails. Different finishes help the aged identify the route they are on through touch. Wood leads to the dining room, plastic to the lavatories, brass to bedrooms. At corners, the handgrip is made of metal to alert the unsteady traveller that a corner requires a change in direction. Even floors help the distinction between areas, with a wooden floor in the dining room and carpet everywhere else but for the tiled bathrooms. Windows open out on to the scented gardens and herb borders, through which a great circular loop route is marked for those who need to keep on the move.

"Obviously we can't make the building like a doughnut," Greg Penoyre says. "But we tried to keep routes going for the agitated, who are restless. If there is an omission, I think we should have had more covered outdoor space."

Inside, overhead light from clerestory windows diffuses the daylight and rooms are never over-lit. This sensitivity to detail proves that good architecture can certainly be beneficial in hospitals and nursing homes. Somehow these things often get forgotten when architects are submerged by detail and the technicalities of hospital and nursing home design. And cost cutting.

The difference in patient charges isn't big enough to give the accountants the upper hand over architects here, either. Independent nursing homes cost about pounds 132.50 a week, compared to pounds 232.50 a week in a state nursing home and against pounds 157 in independent-supported houses like the Newcastle conversions.

"What's so good about architects Prasad and Penoyre is that they are seeking to redress this imbalance," Professor Lawson says. They are not the only ones.

McDowell and Benedetti is a young practice which has just received planning permission from Lewisham council for a new 56-bed nursing home in Blackheath costing pounds 1.75m. They were commissioned by the Merchant Taylors' Company to open in the millennium. A trustee of the Merchant Taylors', architect John Renton, who specialises in disability, advised them on mobility and accessibility.

After McDowell and Benedetti won the contract, the RSA Art for Architecture programme brought in artist Hannah Collins to work with the architects on the project at an early stage, so that her ideas could be deeply integrated into the design. She is working on engaging the sense through texture and feel, sight, sound and smell. Her work deals with memory and the associative qualities of memory and time. In another hospital project, Hannah Collins used found objects from the patients and made a display case of them to put back layers of meaning for people who have had things ripped away from them.

"It's not the glamorous side of architecture for the style magazine generation," Renato Benedetti observes. "Younger architects should be interested in doing difficult and unglamorous work. We've all done fancy shops and apartments for the rich, and much ingenuity goes into them. Now we need to put that ingenuity into more difficult buildings."

There is no seminal work on old people's homes in Britain, but Jonathan McDowell is inspired by the Finnish architect Alvar Aalto's TB sanatorium at Paimio in Finland, "a very uplifting place, institutional but carefully directed". Designed in 1929 when Aalto was 33, it is still operative as a general hospital. Patients lying in bed get a good view of the beech forest, ceiling lights are positioned so as not to shine in their eyes. The vibrant yellow glazed foyer has a lung-shaped canopy sheltering the entrance. There are shallow treads on steps for patients short of breath and on the rooftop there is an ozone sun deck with the chaise longues that Aalto designed.

Renato Benedetti says he felt sad when he first went to an old people's home. Then he was struck by the variety of people and their experiences, which rather surprised him: "Some keep wandering around, so our building must provide a never- ending route that is safe. Some are physically inactive but mentally alert, others not. There must be a wide spread of activity that relates different activities to their landscape."

So they broke down the institutional hierarchy to groups of sixes ("a more family scale"). They also minimised corridors by setting the front doors for these groups of six on to a communal area.

"I imagined my mother or father in an old age home and approached it differently," Renato Benedetti reveals.

What is touching about these two practices is their persistent quest to learn about the special needs of the elderly. No behavioural psychologist could have been more diligent than these architects. Recognition, orientation and navigation around the building have been worked out at different levels after consideration of the mental impairments of many residents. The DSS needs to take these findings seriously. But then, as Sunnad Prasad observes, "Politicans don't engage with art and architecture. They just sprinkle it about like magic dust, superficially. Only Paul Boateng has taken our South Downs Health Trust building seriously. He wanted to understand it, rather than just grasp buzz words like `new' and `modern' and `sustainable'."