Today it is the epitome of pretty period charm but three hundred years ago it was anything but. The cottages were no more than hovels teaming with prostitutes and behind them was the town theatre, like most theatres of the time, a raucous den of serious iniquity. Into this mayhem plunged, with considerable bravery, the local Baptists who built a chapel in its midst in the hope of saving whom they could from the social wreckage.

They and those they set out to save are now long gone and in their place is one Erica Wallace, former Fleet Street journalist, interior designer, luxury Michelin-starred dinner, bed and breakfast keeper and raconteur extraordinaire. She once worked for the Daily Sketchwhere she hatched a chicken egg in her bra for a story and for the News of the World where she was asked to decorate Rupert Murdoch’s personal office suite on the strength of her fellow journalists’ admiration for the décor of her Islington house. Ironically, she had already met Murdoch as a child in Australia where she was born. “As a child, I fell in love with his daddy, Sir Keith, during his visit to my 26-room Australian home. I was banned from the drawing room where he was supporting my surgeon father’s bid for parliament.”

Her cottage comprises part of the old chapel and its yard, the yard part built in the 1970s but with a weatherboard exterior in keeping with its neighbours. This, however, was about the only care taken by the builders. “It was an absolute wreck, about as jerry-built a place as you could imagine,” says Erica. “The main walls had no ties and before I did anything else I had to make sure the whole place wouldn’t fall down around me.”

Upstairs, she found that all that separated the bedroom from the cottage to which she is attached was a plasterboard wall, a discovery she made for herself with a hammer. The location, however, was lovely and the cottage did have great potential so she set to work completely remodelling it from top to bottom.

Originally, the downstairs consisted of a hallway, two rooms and a kitchen while upstairs there were three bedrooms and a bathroom. “The overall space wasn’t large but the layout was ridiculous,” she says. “You couldn’t have come up with a more unimaginative scenario if you’d tried.”

Her solution was to reverse the staircase and knock the remaining space – bar the kitchen – into one open, airy drawing room/dining room with French doors leading out to her patio garden where climbing roses, lilies, jasmine, sweet peas, clematis and a dozen of their friends and relatives jostle for pride of place. The staircase now runs up against a wall, the space beneath a bookcase. Upstairs, the three rooms have become two bedrooms both with en suite bathrooms.

The result is a Tardis of a cottage which, although modest from the outside and still with its original, limited space inside, now gives the impression of a considerably more substantial home. This is not only because Erica has made the very best of every available square centimetre but has added a wealth of fascinating features which make a guided tour a joy.

In the drawing room, one’s eye is continually drawn to a collection of Meissen here, 1930s Crown Derby or Spode there, a cageful of sequined parrots, a riot of tapestry cushions, a Russell Flint limited edition, a kneehole desk found in a furniture-maker’s attic in Leeds, a gilt mirror from a charity shop, two lovely spoon chairs inherited from her mother and dramatic silver curtains. “The living room floods with sun. The 70% silk with 30% Lurex Dupion curtains haven’t faded after eleven years!” Erica explains. “Silver curtains – whatever next!people exclaimed.” Concerning colour, Erica is usually a decade ahead. “Look how much silver and black are now the in thing!” she says.

Around the dining table, the chairs are equally dramatic, upholstered in beautifully soft white leather. “When I was looking for the right leather, I called Home & Garden and they gave me the contact details for a company called Alma Leather in the East End,” she says. Alma, which now has a showroom in Vigo Street in the West End, sent her a selection of swatches and she opted for white Abruzzi leather. “It took a whole cow to cover the seven chairs,” she says ruefully.

The kitchen, between the work surfaces, measures just 5 x 6 feet but such is the design that it accommodates everything that Erica needs. In the corner is a large antique pine corner unit, home to Erica’s lovely collection of Herend. But the real triumph in the kitchen is the under-surface units – or lack of them. Instead of opting for traditional units with doors, Erica designed continuous shelving concealed with heavy, ivy-patterned cotton curtains.

At the foot of the stairs is an oil portrait of Erica as a young girl in Australia and as one climbs the stairs the family theme continues – parents, grandparents, family homes until, at the head, in pride of place, is a letter of congratulations on her chick-raising story fromSketch editor, Sir David English.

On reaching the upstairs landing, it at first seems there is only a library ahead, but, given a gentle shove, the shelves swing open to reveal the two bedrooms. In the guest bedroom a simple double divan bed has been transformed by a bespoke blue and green trelliswork headboard. The two chairs were finished in petit point by her mother who also left her the elegant rosewood pedestal table. On the walls are Australian watercolours.

It is Erica’s own bedroom, however, that is the pièce de résistance. Given a relatively small room, albeit with lovely double aspect views, most people might have opted for a light pastel to help create an illusion of space. Erica didn’t. Erica went for black. Many people might also have opted for a single or small double bed, again to maximize the space. Erica went for a deep mahogany four-poster set off by Chinese gilt Buddha heads atop each corner. The result is stunning.

Two mirrored side tables stand by the four-poster. On the wall is an old iron crucifix Erica picked up in Portugal and painted gold and a print of a Renaissance self-portrait by Filippo Lippi the Younger. A vast, flat-panel television all but vanishes against the black satin walls and in the corner is a gilt-doored shower. “I think it all works rather well,” says Erica in the understatement of the morning.

She was speaking of the bedroom but she might just as well have been describing the house as a whole. Given very little in terms of either quantity or quality to work with, Erica has created a beautiful, intriguing and original home. The cobbled lane in which it stands may be something of a secret but a secret hardly as surprising and delightful as what lies behind Erica’s unassuming front door.