Another morning in Dublin's Grangegorman night shelter and some 30 men sit down for breakfast. Nailed to the black-splattered walls are amateur paintings of beaches, stone country churches and riverside picnics.

They are the work of a man who came to the Salvation Army hostel when it opened as a temporary shelter in 1993. Their chocolatebox tranquility is ironic in the middle of what one healthboard worker calls "an oasis of hell".

The men sit in groups at the long grey tables. The biggest group consists of more than a dozen younger men - most of them drug addicts who are making up a growing section of Dublin's homeless. One young man's face is badly beaten, a fresh plaster on his nose and recently congealed blood on the gashes and bruises.

A new Eastern Health Board study has found that almost a third of Dublin's homeless population uses illegal drugs. The figure is probably underestimated, the authors say, as a large proportion of the more than 500 people questioned did not give a reason for their homelessness.

Many of these people have passed through Grangegorman. Almost all its regulars are heroin addicts, some of them on methadone. Many of the homeless people who slept there when it first opened are now too frightened to walk down the unlit path.

In the five years since it was opened the hostel has been surrounded by expensive apartment developments, but none of the money has leaked through its walls.

"Every night men arrive at the door having been beaten up and robbed on the way here," says the assistant officer in charge, Raymond Gallagher. "We send them to the Mater in an ambulance and they're bandaged up and sent back. So they have to walk back up the lane where they got the beating in the first place." Three pounds a night gets a worn mattress and breakfast in the cavernous, makeshift building that used to be Unit J of the old St Brendan's Hospital. There are no walls to block out the coughing and shouting of 34 other men and no curtains to block out the early morning light.

Outside, two men slept in the doorway. One is barred, he says, and will be allowed back in that night. Some of their blankets have been burnt, he says, in an attempt to keep them from sleeping rough in the grounds.

The main building in the grounds, the listed granite hospital, was cleared out by the Garda two weeks ago. Up to then, those who could not get into the shelter would sleep there - up to 30 men a night. Now the Eastern Health Board pays for four nightsecurity people to keep them out. Two security staff, an Alsatian and a Doberman do the job during the day. Last week the windows were blocked with steel shutters.

The unit is expected to remain open until the end of the year, when extra beds are due to be ready at Cedar House, another Salvation Army-run hostel in Marlborough Street, and Dublin Corporation's Model Hostel on Benburb Street.

Raymond Gallagher has seen an increasing number of young men arriving at the hostel and losing hope that they will ever get off the streets.

"I see young lads in their 20s who are all enthusiastic about looking for a flat. Then six months later that's forgotten and if you mentioned a flat they'd freak." Alice Leahy, director of Trust, who has worked with the homeless for three decades, says the situation reminds her of 25 years ago. "But now the emphasis is on controlling people, on medication or whatever. You see them going around all fat and bloated. I'd prefer to see them out there angry about something." The system has encouraged a childlike dependency, she says. All the energy that could be spent on pulling themselves out of their situation goes into finding a bed each night. To get the social welfare payment they have to spend a night at Grangegorman or one of the other hostels to have an "address". For the heroin addicts who are not on methadone, all the energy goes into buying the next fix.

Some blame Dublin Corporation for the rise in young addicts on the street. Since January 1997 the Corporation has evicted an average of one household a week, as a response to community anger about drug dealing in flat complexes and estates. It is rough justice, with some families being evicted where one member is responsible for the problem.

Thirty five of those evictions have been carried out without court orders, under new laws allowing the Corporation to deal swiftly with "unsocial behaviour". The Corporation's principal officer for housing and community services, Brendan Kenny, says that in one case the neighbours clapped as an eviction was carried out.

He denies that the evictions, 87 in total, are responsible for all the homeless addicts. "A lot of people get accommodation quite handily when they're evicted. Some of them move home. A lot are well able to look after themselves. For us to have any chance of managing our estates better we have to do this."

However there are those addict-dealers who do end up on the streets, he says. And there is a need for rehabilitation to allow those people back on the housing list. Anyone evicted for anti-social behaviour, mostly drug dealing, is blacklisted.

The evictions are a response to the anger of communities, he says. "We did nothing for so long. The Corporation has a lot to answer for. We managed these estates from desks inside the Civic Offices. We were not really managing them, just administering them."

The property boom has pushed people onto the Corporation housing list "that were never on it before," Kenny says. Those who can't afford to buy are renting, pushing those who could never afford to buy out of the rental market, and onto the waiting list. Those on the bottom rung of the housing ladder have been pushed off into one of the 600 hostel beds in the city, which are full every night.

At the end of June the Corporation presented the Government with a plan to spend £100 million revamping some of its worst-affected complexes, including St Michael's Estate in Inchicore, and estates in the north inner-city. It is an ambitious plan, and future plans will propose involving private developers in building mixed estates of public and private housing.

So far there has been no response from the Department of the Environment. The Government is committed to spending more than £100 million on building new prisons. Plans to improve the homes of those people who grew up to fill the prisons have yet to be funded to the same level.

In the meantime, one health board worker describes the growing population of homeless addicts as a society unto itself. "If we've made a decision in society that we're going to protect that group, what are we going to do about the other half? The bottom of the barrel is here and around here. Our rules mean very little to them. What do we offer them, other than £67.40 a week? So, they ask: why actually take part in society? This is an oasis of hell. But it's hidden from most people and we just mop up around the edges."