View from Lisbon: in Portugal, traditions of craftsmanship and urbanity are translated for the modern world by a masterly group of architects working in stone and concrete.

I have been in Lisbon for Tektonika, the annual Portuguese international building and construction fair, which is held in the four spacious pavilions lined up along the Tagus built as part of the Expo 98 development (AR July 1998). I had imagined that an Expo site five years on would have the look of a declining funfair, something like poor Margate's Dreamland. Far from it: now renamed Parque das Nacoes, it has become a popular site for Lisboners, and they swarm not only into the Vasco da Gama shopping centre but also to the aquarium, the restaurants, the gardens, and the cable car. At the time of my visit a military ceremony of some kind was going on in Alvaro Siza's Portuguese Pavilion. Squadrons of soldiers, sailors, airmen, and policemen in dress uniform were lined up under its great swooping canopy while a band improbably played Euro-trash lift music. The river glittered behind. It was like a modern version of the Field of the Cloth of Gold: Siza's roof providing a huge tent, the most splendid in the world.

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The Tektonika fair was altogether a more enjoyable business than our own dear Ideal Home Exhibition, and not just because one leaves to the Tagus, rather than to the Earls Court Road. Although all the big European names were there, the tremendous displays of local marbles and ceramics, the country's principal building exports, gave some pavilions a Portuguese flavour. While the fair was in progress, the Portuguese architects' institute held an international congress on natural stone architecture and construction, which culminated in a ceremony for the winners of the 'Stone Architecture Award', an annual architects' prize for a scheme making the most original, most sensitive, and most technologically appropriate use of stone.

This year's winner was a scheme by Jose Lamas and Associates for a landscaping project adjacent to the ancient castle in the village of Obidos, near the coast approximately 70km north of Lisbon towards the Atlantic. This is a picture-postcard mediaeval walled village, with a fortress towards its northernmost point. The fortress itself was originally established during the period of Moorish occupation, and its keep dates from the fourteenth century; it has long been in use as the first, and perhaps the most romantic, pousada, a state-owned guest house. The small triangle of land enclosed by the village walls to the north of the castle, high above the plain (and the railway station), was until recently an almost barren outcrop.

Lamas' plan, which was the winner of a public ideas competition in 1991, transforms this area into a tight network of small open public spaces, including an amphitheatre, green areas and pathways, and a place for open-air events for which the surrounding landscape provides a wonderful backdrop. The architect has incorporated both stone and concrete into a land-scape installation that both complements and highlights the medieval work that surrounds it. The final stage of the project, due for completion next year, will incorporate a funicular railway that climbs the castle ramparts from the north, and a serpentine landscaped path down to a tiny extramural chapel that has its origins in a Roman temple of Jupiter.

Lamas' clients were the local town council and the Portuguese Institute of Cultural Heritage: Joao Regal, of the architects' institute, tells me that in choosing this scheme and in supporting it through what turned out to be a difficult process of planning approval and detailed design, the public authorities chose to take a risk: Lamas' scheme is bold, 'modern' in the old-fashioned sense; and entirely devoid of sycophantic references to historic architecture. Further inspection shows that both runners-up to the Stone Architecture Award also enjoyed the unqualified support of public bodies. The second prize went to the well-known practice of Eduardo Souto de Moura, for the reshaping of the sea promenade at Matosinhos, just north of Oporto; and the third to Manuel Maia Gomes, for work including additions to and refurbishment of the town hall at Vila do Conde. The casual visitor cannot easily determine to what extent Portugal still has a buoyant and imaginative public sector, relative to other European countries; but many urban projects evidently carry the stamp of public interest and public gain. An extension to Lisbon's metro will soon connect Santa Apolonia, the city's principal railway station, to the Baixa-Chiado area, and Chiado itself is so well restored following the fire of 1988 that the seams between old and new would be undetectable, were it not for the superb workmanship of some of the latter. Siza is still at work here as projectista, as at least one enormous building site nameboard on the Rua do Alecrim makes clear.

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Here and there are the familiar signs that public interests have fallen into the hands of the private sector. On leaving the railway station at Sintra, of all places, I was surprised to find myself confronted with a bus stop decorated with a horribly familiar-looking logo. Although the company identified with that logo sold out a couple of years ago, the new operator has not yet repainted its fleet; so for the time being the languorous tall conic chimneys, the domes and the terraces of the Palacio National, that stretch into the sky and preside over the beautiful landscape of vines, exotic gardens and orange groves that once attracted Beckford and Byron, must share tourists' photographs with the hideous red, orange, white and blue livery of the brash British bus company 'Stagecoach'.

This at least prepared me for the journey home. On returning to London, I found that the lobbies around the council chamber in London's County Hall have been converted into Saatchi's private art gallery. You can now pay the staggering sum of [pounds sterling]8.50 to pass thuggish security officers to see some formerly sensational artworks pinned tackily onto walls; the former municipal palace, once the engine of London's local government, is now reduced to housing a commercial freak show as well as a Chinese restaurant and a burger bar. Would this have happened in Lisbon?