Architecture: What sort of life for a place of death?: Jonathan Glancey reports on a controversial scheme to redevelop the site of the Nazi concentration camp where the SS masterminded Hitler's Final Solution

This month the town council of Oranienburg, 20 miles north of Berlin, will decide whether or not to turn the former SS barracks at Sachsenhausen, the Nazi concentration camp that was nearest to Berlin, into an estate of 8,000 houses.

There are those who believe that housing is essential to bring prosperity and up to 50,000 people to the economically depressed town, and those, such as the architect Daniel Libeskind, who believe that no one should either want or be encouraged to live on the site. Libeskind has proposed a radical alternative - with no houses at all - that will be considered by the state parliament of Brandenburg, which has the power to overturn the town council's decision.

Whatever is decided, the camp itself will be left as a memorial to the people the Nazis forced into slavery and killed there, and those to whom the Soviets did the same when they held Nazi prisoners and Russian dissidents at Sachsenhausen between 1945 and 1950.

Sachsenhausen, however, is infamous not just because of its death camp, but also because it was the administrative headquarters of the 'Final Solution'. That building, designed in a sentimental volkisch style favoured by the SS, also survives. Hermann Czech, the Viennese architect whose housing scheme is currently most favoured by local councillors wants to turn it - perhaps a little unthinkingly - into a health, beauty and fitness centre.

Earlier this month the town's leaders awarded Mr Czech the first prize in an architectural competition to redevelop the Sachsenhausen site. Like five of the six architects who were invited to compete, he has come up with a perfectly acceptable plan for siting and building the 8,000 houses Oranienburg asked for.

The odd one out among the six is the Polish-born Libeskind, currently working in Berlin on the design of the iconoclastic and controversial Jewish Museum. Many members of Libeskind's family died in Nazi concentration camps. His alternative plan envisages the demolition of the SS barracks and headquarters building, leaving them as pseudo-archaeological ruins no more than three or four courses of brick high.

The land around the ruins would be excavated, but only by a few feet, then the whole site would be flooded with water from a nearby canal. Excavated earth would be piled up around the lake to create the setting and substructure for a newly-planted forest. Walkways suspended above the lake and piers set into it would allow people to walk across or stop and gaze at what would have become a lake within a forest, fish flitting between the sunken remains of the Nazi buildings. The paths would lead, as the existing camp paths always have, down to the prison huts and crematorium beyond, but between trees full of birdsong. Lake, forest and walkways are at the heart of Libeskind's idea for 'displacing the imagery of the past and reconsecrating the land' at Sachsenhausen.

This may sound potentially beautiful and moving, but also pie-in-the-sky. What commercial gain can such a sentimental plan bring to Oranienburg? Several developers, however, much to the surprise of local councillors - and to Libeskind himself - have expressed interest in his proposal. The reason is that an arrow of land shooting through the site would, in Libeskind's plan, be used for a high-intensity urban development of public and private buildings. These would include schools for computer and industrial retraining, a library, archive and museum as well as studios and workshops for painters, sculptors, dancers, film-makers, musicians and, as if recalling pre-war Berlin, 'instrument makers'.

Such facilities would make Oranienburg a centre for teaching new skills to German workers who hope to make their living in Berlin. They would also foster artistic excellence. Far from being unrealistic, Libeskind's proposal looks potentially more lucrative, especially in the long term, than other all-too-obvious plans, no matter how well resolved architecturally, for building thousands of homes.

'We didn't expect to attract such interest,' says Nina Libeskind, Daniel's wife and business partner. 'Danny put up the scheme as a way of questioning what he sees as the folly and immorality of housing people at Sachsenhausen. But from the way developers have been talking, we have come up with an idea that is both respectful of the site and could make commercial sense.'

Libeskind's aim is to 'bring people to Sachsenhausen to remember, but at the same time it must be a place for hope, a place where those who are trying to rebuild Germany can find a workplace and a future, a place for nature, for contemplation.'

What is going to happen next is uncertain. The town may decide to go ahead with the Hermann Czech scheme and fill Oranienburg with people desperate for work in Berlin, leaving them to commute to the capital and return in the evenings to regain strength joyfully in the fitness centre. Or it may be persuaded by the state parliament to think again.

Other death camps and SS barracks remain intact in eastern Germany. At some point those who guard them will be faced with the question of what to do with them. Daniel Libeskind's moving, intelligent and realistic plan for Sachsenhausen shows just what can be done if town councillors, architects and developers exercise a little imagination, a little humanity and a proper respect for what remains an overbearing past.

(Photograph omitted)