The dilemma was a familiar one. How to transform a much-loved but increasingly cramped Victorian home to meet the demands of a growing family - and 21st century tastes? On a tight budget? With added light and space? On Friern Road in London's newly-fashionable East Dulwich, Kieran Wardle Architects were presented with just such a challenge. The results you see here: a welcoming, relaxed and robust family sanctuary with more than a modicum of real style built-in.

The key to the success here is using every inch of available space to accommodate not only people but their clutter too. The first order of business was to use the "lost" space of the return down the side of the house and incorporate that - with a skylight - into the new living/dining/cooking area. A series of rooms was knocked together and bold large windows and glazed doors added to create flow into the garden.

White structural beams are left unclothed to create what the architects note is a "striking architectural feature". It's one that celebrates a form follows function approach, too. There's a subtle deluxe feel to this space, in part created by the consistency of the determinedly neutral colour palette. "The kitchen is quietly luxurious," is how Kieran Wardle themselves put it, "with the architects following the principle of spending the budget in places where it’s felt rather than seen."

Flexible thinking has created unexpected - and essential - concealed storage. A tall cupboard unit, for example, houses not only a built-in oven but also doubles as a hidden cloakroom and utility space, ready for everything from kids' scooters to coats and hats. Floors are in concrete tiles rather than poured concrete, which creates the same everyday effect for far less money. The tiles extend out onto the patio area further to emphasise an inside/outside flow.

The overall budget? A relatively modest £110,000. "The extension has been built to last," say the architects, "with thick external walls and quality handmade slender bricks conveying a sense of character that does justice to the original Victorian home." And since the Victorians were all about ambitious engineering for the future, we think they'd approve.

For more impressive architecture, discover 5 courtyards that bring the outdoors in.