Why Australian chef Paul Merrony is making a big noise on the street known as London's Tin Pan Alley

Forget the ice disappearing from the North Pole; it's the hand towels you should be worried about. Those piles of neatly folded face-washers that upmarket restaurants give you in the loos are vanishing, credit-crunched out of existence. And thank heavens for that.

Food always tastes better when it comes with a dash of stoicism and a pinch of fortitude. We've tried gratuitous extravagance and over-consumption, and it didn't do us any good at all. The only way to survive now is to find a great little neighbourhood bistro to sustain us until the economy turns itself around. And if we can walk there and back, then that's a bit more fuel available for essential services.

The Giaconda Dining Room recently opened by Australian chef Paul Merrony is a good place to start. In the West End of the 1960s, Café Giaconda was a legendary muso hang-out, and Denmark Street was where it was at. Bob Marley came here to buy his first guitar, the Stones recorded their first album at number four, Elton John was an office boy at number 20, and Bowie lived in a camper van parked opposite the café.

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Merrony, too, has history. He left Sydney as a young gun to work with the Roux brothers in Britain and La Tour d'Argent in Paris in the 1980s, before becoming one of the big names of the burgeoning Sydney dining scene well into the 1990s. He's now back "for a bit of a change", having done a budget makeover of the 35-seat site.

It ain't The Ivy, but it is sweet, small and brown-woody, with dark bistro chairs, bare tables and walls of wine. At the time of my visit, there is still no outdoor signage and no sound system, so the bubbly French waitress sings snatches of French pop songs as she goes about her business. The idea of a "slow" restaurant that is allowed to evolve, rather than springing up fully formed, also seems to fit with the times.

The menu is built on ingredients that need a good cook more than they need a froth or a foam garnish, with dishes such as pumpkin risotto with oregano, crisped pig's trotters (an old Merrony signature from Sydney), fish cakes with caper sauce, roast chicken for two with roast potatoes, ham-hock hash with carrots and parsley, and pork and fennel sausages with braised beans.

A salad of beetroot and sweet leeks is topped with light creamy goat curd (£6.50), and a main course of vitello tonnato (£12.75) has delicately pink, poached veal layered with radicchio, potatoes, hard-boiled eggs and a beautifully balanced tuna sauce. A smooth curve of chicken liver and juniper paté (£6.50) that looks like rich chocolate ice-cream is drop-dead gorgeous spread on hot toast. That old credit-crunch favourite, tripe, makes a gutsy, smoky, winey, macho main course (£9.50) when braised with chorizo, smoked paprika and butter beans. It's all bloody good value.

But a kitchen big enough for just one chef and an apprentice can't do everything well. Deep-frying isn't a great strength, and fried onion rings on a classic beef carpaccio (£6.50) are oily. Puds are mostly of the done-ahead mousse and tiramisu style, and the priciest – poached peach and crunchy Eton mess for £6 – is indeed messy, if happily so.

Merrony isn't reinventing anything, but his particular take on urban peasant food makes him very much a chef for our times. Every sauce shines, every vinaigrette cuts through. A £1 cover charge takes care of bread, olives and carafes of still or sparkling water, and the well-chosen wines have a flat charge on top rather than a mark-up, making a light and breezy Domaine du Calvaire de Roche-Grès Fleurie good value at £24.

If you want to survive the tough times ahead predicted by the Bank of England, find yourself a cook who knows how to do things well, fast and cheap – and say goodbye to fancy loos and little hand-towels. I've found mine, and I'm not leaving until Mervyn King says I can.

15/20

SCORES: 1-9 STAY HOME AND COOK, 10-11 NEEDS HELP, 12 OK, 13 PLEASANT ENOUGH, 14 GOOD, 15 VERY GOOD, 16 CAPABLE OF GREATNESS, 17 SPECIAL, CAN’T WAIT TO GO BACK, 18 HIGHLY HONOURABLE, 19 UNIQUE AND MEMORABLE, 20 AS GOOD AS IT GETS

The Giaconda Dining Room, 9 Denmark Street, London WC2, tel: 020 7240 3334. Lunch and dinner, Mon-Fri. Around £70 for two, including wine and service

Second helpings: More wizards of Oz

Porthminster Café

Porthminster Beach, St Ives, Cornwall, tel: 01736 795 352

Being situated on the beach, Australian chef Michael Smith probably doesn't get too homesick. Equally sunny is the food: tea-smoked salmon and Thai crab salad

Darcy's

2 Hatfield Road, St Albans, Hertfordshire, tel: 01727 730 777

If you didn't know exec chef Ruth Hurren was Aussie, her kangaroo with aubergine mash, salt and pepper squid and pineapple parfait should give you a clue

The Ledbury

127 Ledbury Road, London W11, tel: 020 7792 9090

Brett Graham was named Best Young Chef in both Sydney and London. Now 29, with a Michelin star under his belt, he wows diners with finessed French cooking