Town house triumph.

Showing a profound understanding of materials and light, this reinterpretation of the urban terraced house in Manhattan interweaves tradition and the present, and the abstract values of architecture with those of life.

The house Williams & Tsien have built in Manhattan is the kind of urban dwelling that we would all like to have: big, centrally located and full of particular places and events. It is on a cross-street, which was presumably originally composed of nineteenth-century brownstones, but which is now mainly lined by those very grim brick apartment blocks that make uptown Manhattan so depressing for many Europeans. The 15-storey tenements may have been rushed up post-war on the cheap to satisfy urgent demand, but they now contain some of the most desirable flats in the city.

The new single-family house for a couple with one daughter is flanked by one of these dingy monsters, and on its other side, it has one of the few remaining brownstones, immensely perky, cheerful and decently scaled by comparison with the apartment blocks. The Williams & Tsien building occupies the 30ft by 100ft (9.1 m x 30.5m) site of two brownstones, and has to bridge the scales of its neighbours. It does this by putting a great panel of hammered grey Indiana limestone in the middle of the street elevation and allowing the glazing to flow round it. The glass, which has a greenish tinge (and is held in dark grey-green metal glazing bars) ranges from transparent in the upper floors to translucent lower down, providing a measure of privacy from the street and softly filtered light inside.

The back (south) wall which faces the garden is almost all of transparent glass, opening the interior to the sun. Luminosity is increased by the main sectional move, a void in the middle of the house into which light pours from the glazed roof. The void has far more reason to be called an atrium in the classical sense than the often tacky volumes to be found in the middles of most office blocks nowadays. It contains the stairs, which are carefully arranged so that in general, flights do not occur above each floor, so light can flow down the whole interior (indeed, there is one place in the basement where you can look from the pool right up the entire house to the sky).

Galleries look over the void which spatially connects the main semi-public functions. The organisation is broadly that of a traditional urban terraced house but on a very grand scale. At entrance level is the formal dining room next to the hall, with the kitchen in the middle of the plan next to the sunny family room that overlooks the 30ft x 30ft garden at the back. From the hall, a generous dog-leg stair leads up to the double-height piano nobile with its formal living room, study and library. A big white wall to the left (north) of the stair as you go up is revealed to be an echo of the limestone panel on the front and, apart from adding order to the middle of the plan, it serves to display works from the owners' extraordinary art collection.

Above the piano nobile is the first of what in Renaissance terminology is called an attic floor, which contains the two main bedrooms (a guest bedroom is slung into a mezzanine over the study). In the second attic floor at the top of the house are the servants' rooms, but with their glass walls and private bathrooms, these are far from being traditional garrets.

Throughout, spaces and materials are handled with propriety. Floors in the more public spaces are of stone. In the formal volumes they are in cherrywood with carpets designed by Billie Tsien. Cherry is used in balustrade rails and cabinetwork as well, while the stone recurs in fireplaces and countertops - all the places you touch have sensuous properties. But most walls and ceilings are simply in white skimmed plasterboard, its unobtrusive neutrality setting off the artworks.

The house is admittedly very expensive, but clients and architects have worked harmoniously together to use space and materials with modesty and grace. It is the kind of commission that architects get once in a lifetime, and they have accepted the challenge with an exemplary understanding and interweaving of the roles of tradition and the present, abstract architectural values and those of life.