For millions of tourists, Eros is Piccadilly Circus. Alfred Gilbert's famous aluminium statue, erected a century ago, is a magnet for young people in denim - and high-rise rucksacks - who sit around the statue like Brownies around a toadstool while Londoners and traffic hurry by.

For Londoners, Piccadilly Circus is, as one five-year-old girl described it on the radio recently, 'a place where tourists go' and, by inference, where Londoners do not. Now the revamped Criterion Theatre and the restaurateurs Bob Peyton and Rocco Forte hope to bring Londoners - as well as sophistication and style - back to one of the most banal spots in the capital.

Mr Peyton and Mr Forte have just reopened the spectacular Byzantine-style Criterion restaurant, designed by Thomas Verity and first opened in 1874; the Criterion Theatre, an extraordinary underground Victorian concert hall and playhouse, also the work of Verity, reopens next month. Both aim to attract Londoners as well as tourists to their grandiloquent interiors. Meanwhile, Lillywhites, the well known sports emporium with one entrance set between the restaurant and theatre, has been given a facelift, and the bizarre post-modern commercial development on the corner of Haymarket has been unveiled.

This overwrought building incorporates the new Japanese department store, Sogo, with a corner sculpture composed of four horrid sculpted horses that are meant to splash through sprays of water, as if drawn from one of those paintings of wild stallions splashing through orange and yellow foam which Woolworth's used to sell.

The four horses of Piccadilly Circus do not splash through water, however. Nor does Eros aim his bow, as he once did, through liquid jets. The fountains have been turned off for some months and Eros himself hidden by grim wooden hoardings. Westminster City Council says that people liked to swing from his nicely turned tin leg and, as this is likely to break under the weight, Eros is out of bounds. A replica is being made and the real Eros will go into permanent retirement.

The plight of Eros and the four post-modern horses is the plight of Piccadilly Circus. Things just ain't what they used to be. Perhaps, though, the Circus always was more tawdry than we want to believe: if this was ever the hub of an empire, it was an empire built on tacky trade and garish advertising. Yet there was a time, between the wars, when it was fondly regarded. It used to be where the smartest folk would come to dine at the Criterion and Trocadero, to catch a play at the Criterion and to drive their Bentleys, Lagondas and Hispano-Suizas through the throng of open-topped buses and horse-drawn vans.

The Circus has for decades lacked style - which is odd, given how near it is to bohemian Soho and snooty St James's. Soho has had its ups and downs - and nearly lost its character altogether - as the retail chains tried to shackle its low-life charms in the booming Eighties; but it has brimmed full of Londoners every night of the week since it was first developed in the 18th century.

St James's, on the other side of Piccadilly, has managed to maintain its upper-crust individuality; it may have lost such favourites as Jules Bar on Jermyn Street, but this is where Sir Terence Conran is building his massive Quaglino's, a London brasserie designed to match the size, buzz and quality of La Coupole, the famous Montparnasse eatery.

Between Soho and St James's is Piccadilly Circus. Will it make a return to fashionable London life? Oddly enough, it nearly did in 1984, when Trusthouse Forte restored the Criterion restaurant to its Victorian glory (since 1960 its spectacular decoration had been hidden behind Formica walls). For a while, at least, this golden brasserie was jam-packed with art students, the young and the fashionable. This was the age of matt black; on some days the bar of the brasserie looked like a congregation of religious penitents, so solemn the faces and so black the clothes set against the marble walls and mosaic ceilings adapted from those of St Mark's in Venice. The Criterion closed two years ago when the whole site - comprising Sogo, Lillywhites and the Criterion Theatre - was redeveloped.

Although the splendour of Verity's interior survives, Mr Peyton and Mr Forte have effectively denied access to art students and aspiring actors. The Criterion is no longer a brasserie but a full-blown restaurant. There is no bar to hang around in with a long drawn-out coffee or shared Mexican beer. This is a shame because the interior - cathedral-like in its dimensions - calls out to be divided into bar and brasserie. This could have been London's answer to Paris's Cafe Beaubourg or Cafe Coste. Sadly, it is destined to become a grand dining room for business executives looking for 'something different' and a haunt for tourists. Londoners looking for a stylish place to hang out, eat and snack will stick to Soho and slip off to St James's when Quaglino opens next year.

What might save the day would be a joint decision by Mr Forte, Mr Peyton and Westminster City Council to open a giant cafe on the pavement that sprawls outside the restaurant doors. There is plenty of space and it is simply not true that London weather precludes open-air cafes. Whatever tourists might believe, the sun does shine in London.

What might also bring Londoners back to Piccadilly is the revived Criterion Theatre, which closed its doors four years ago. Sally Greene, the actress who restored the Richmond Theatre in Surrey (an architectural gem designed by Frank Matcham), has acquired the lease of the Criterion. It is being restored by 26-year-old Laurence LLewellyn-Bowen, who worked on the Richmond restoration.

The entrance from Piccadilly is a sensitive restoration of the famous tiled lobby and stair, while the auditorium is based closely on the Louis XVI-style redesign of 1884. Llewelyn-Bowen's work is an informed reworking of this original theme.

Ms Greene promises that the Criterion, an intimate and delightful space, will be an intelligent and avant-garde theatre; she says she will be working with the Almeida, Hampstead and Royal Court theatres - the best of London's large fringe venues - and that the Criterion will feature late-night comedy on Fridays and Saturdays. There will be no West End shows with names like 'I'm sorry, I've forgotten my trousers.'

If she achieves her aim, Ms Greene could bring Londoners flocking to Piccadilly Circus. Although Soho is just around the corner, it does seem a shame that the Criterion (which is, after all, part of the same remodelled Victorian development) will fail to meet their need for a big, bustling and glamorous brasserie.

Piccadilly Circus hovers somewhere between the banal and the potentially glorious. A stylish brasserie, a pioneering theatre, a big pavement cafe and Eros restored to his former glory might just tip the balance in favour of the latter.

(Photographs omitted)