Hangzhou International Youth Hostel at the Nanshan Road (No.101-3 Nanshan Road) is very ideally located – just right at the side of the beautiful West Lake. Opposite is the famous China Arts Institute (中國美術學院). Nearby, on the tree-lined Nanshan road, you can find good bars, teahouses, restaurants, cafes, museums and galleries.
You cannot find another youth hostel in the whole Hangzhou such nicely located. I was very impressed by the location when I visited it years ago.
The hostel is well run and has a nice garden and a tastefully decorated spacious living room. Room price ranges from US$4 in a dorm to US$ 18 for a single private ensuite. Some rooms have view over the West Lake.
You can book online here via Hostel World.