What Herzog & de Meuron did for Southwark with the Tate Modern it is about to repeat at another deprived south London borough, this time with a dance centre in glorious technicolour plastic. Martin Spring pays a visit to a unique building.
Approach the nearly completed Laban DANCE centre in Deptford, south-east London, and you are greeted by a wide concave screen of milky plastic. Far from a conventional 3D building with roof and flank walls, it looks more like the screen of an open-air drive-in cinema. The plastic is seamless and composed of translucent planks of polycarbonate tinted with wide watery bands of magenta, dark green and lime green, like a rainbow on a foggy day. In places, the plastic gives way to large areas of clear glazing, inviting you to peer deep into the building.

Laban Centre comes with the finest pedigree of avant-garde architecture. Its Swiss architect, Herzog & de Meuron, last year won the international Pritzker Prize, worth £70,000, and the practice's first UK building, the Tate Modern, became the first winner of the prime minister's award for better public building. The colour scheme at Laban, which is an integral part of the design, is the product of a collaboration with the artist Michael Craig-Martin.

Herzog & de Meuron's striking brand of architecture is unlike any other seen in the UK. There are no blobby forms beloved of Will Alsop or jagged spikes favoured by Zaha Hadid and Daniel Libeskind. Instead, the delight of the Laban Centre lies in the more impressionistic effects of transparency, translucency, reflection and colour, made possible by modern see-through materials of glass and plastic. These optical effects coalesce and overlap in a kaleidoscope of unusual, ambiguous and occasionally disconcerting effects.

It's an appropriately fluid design for a centre anxious to link dance to other artistic realms, such as music, sculpture and painting. Hungarian founder Rudolf Laban, who evolved a vision of dance as an enrichment of everyday life, set up a school in Britain after fleeing Nazi Germany in 1938. The Laban Centre, which had been based in a converted primary school nearby, offers degree and diploma courses in all aspects of contemporary dance.

At night, the entire building glows like a Chinese lantern. The colours of the polycarbonate combine with the dark stripes silhouetted by the structural frame behind it to give the cladding a curious tartan patterning. The clear-glazed panels appear like rectangular holes in the facade, framing dancers practising in the brightly lit studios behind.

This sleek, hyper-modern building, which looks like it has been shrink-wrapped, is made all the more surreal by its setting in the urban wasteland of Deptford. It backs on to the muddy Deptford Creek, sprinkled with discarded shopping trolleys and the rotting hulks of ancient Thames barges. Car-breaker yards, truck depots and tyre recycling yards crowd in on the other three sides.

The bland facades conceal a deceptively large interior. More like a village than a simple building, it packs in 13 lofty dance studios, a fully fledged 300-seat raked theatre with fly-tower for storing stage backdrops, a library, public cafe and numerous minor rooms, all adding up to 9000 m2. Corridors have been expanded to three wedge-shaped streets that are wide enough for students to mill around and socialise without obstructing other people. The streets run through from front to rear facades, which are fully glazed to frame wide vistas of the creek, Greenwich's St Alfege's church steeple to the rear and the spire of Deptford church at the front.

Two courtyards, planned as exotic moss gardens, lie between the internal streets. The moss is currently being cultivated in Belgium on a series of paving slabs and will be installed in the new year.

The most remarkable internal features are the clear-glazed internal partitions, which enclose the dance studios and the courtyards. Dancers are silhouetted against the tinted translucent polycarbonate external wall and fully displayed to the internal streets through the glazed partitions. The combined effect enhances the form and movement of the dancers, offering up an irresistible spectacle to fellow staff and students as they circulate through the internal streets.

As Laban Centre is widely recognised as one of Britian's foremost dance centres, the transparent dance studios are as functional as they are aesthetic. The response from students, who moved in at the start of the session in October, is positive. "It's nice to dance and be watched as well," says River Charmalt. "You learn a lot from other students when you see them move in a certain way." Adam Rutherford adds: "The big spaces encourage you to extend yourself, as if everything is expanding."

Susan Santler, who teaches contemporary dance techniques, agrees with the students. "The transparent architecture, with so much space, is fantastic for dance training, as it is good to have an audience and it is conducive to different kinds of dance." But she adds: "It's more difficult for choreography. For that we still use the more intimate spaces of the old school we used to occupy."

The interior, with exposed services in the ceiling, has a severely functional style that is familiar from the Tate Modern. One big difference, though, is that the opaque partitions lining the internal streets are painted vivid magenta, forest green and lime green to match the fainter tints in the curtain walls and help users navigate the labyrinth. Still, the flat surfaces and hard edges are rendered curiously insubstantial by the overlays of transparency, translucency and reflection inherent in the walls and partitions.

Even the most massive and sculptural element in the building – a spiral staircase in bush-hammered concrete – is transformed by these topsy-turvy optical effects. After experimenting with bright green stain, Herzog & de Meuron had it painted in gloss black lacquer. Viewed through a glass partition from the library on the ground floor, the black mass is lost in a welter of reflections. And where the staircase emerges on the first floor in front of a huge clear-glazed window wall, the daylight reflected off its shiny surface makes it look as if it is composed of precious stones.

Herzog & de Meuron partner Harry Gugger says the Laban Centre is being built for a unit cost one-third less than the Tate Modern. The project manager, Rob Leslie Carter of Arup, adds that fitting the design into the budget involved £2.5m worth of value engineering, which entailed lowering the building height and reducing the area of clear glazing.

At the same time, an additional 750 m2 floor area and other extras have been fitted into the design, raising the cost by £1.5m to £24m. This means that, although the building opened to students in October as intended, several items have still to be completed, and these await extra funding. They include external landscaping, in which site spoil will be moulded into an open-air amphitheatre, and a vivid mural by Michael Craig-Martin.

The project was made possible by a £12.5m arts lottery grant with additional funding from a network of local and public authorities. All of these are pinning their hopes on the Laban Centre acting as a catalyst for regeneration in an area categorised, under the government's index of multiple deprivation, as among the 10% most deprived in England. In proferring culture as the focus for physical, social and economic renewal, the Laban Centre joins the Peckham Library in south London, the new Oldham Gallery and the Baltic Gallery of Modern Art in Gateshead.

Accordingly, the Laban Centre comes with an ambitious agenda to reach out to the local community, holding numerous dance classes for children, teenagers and even mothers with babies. Laban will also communicate with the wider world of arts in cross-genre productions. Here again, the iconic building is expected to play its part. "It's such an inspiring piece of architecture and it has such an incredibly strong ambience," says Susan Santler, "so it definitely encourages collaboration outside the dance field. There is such a variety of places and spaces, and the large dance studio is fitted with projection equipment, so we can bring in artists, architects and film directors. That's where the arts as a whole are going, and I'm thrilled about it."

A catalyst for urban regeneration and a functional building for teaching dance, Herzog & de Meuron's Laban Centre is as showy and elegant as the practising students so visible inside.

Herzog & de Meuron: Showing Britain new steps

In designing Laban Centre, avant-garde architect Herzog & de Meuron has introduced several new materials to Britain. Polycarbonate cladding
The building is encased in ribbed polycarbonate planks, which are translucent, nearly unbreakable, non-flammable and should last 30-40 years. The planks were extruded by Rodeca of Switzerland with four layers of cells, giving a high U-value of 1.45 W/m2°K, and tinted with colour. They were delivered to site at the full 14 m height of the building and clipped together using a hidden waterproof tongue-and-groove joint by Swiss contractor Hirsch Metal. Sprung flooring
The dance studios were fitted with a modular sprung floor system supplied by the American firm Harlequin. Plywood panels measuring 2 × 2 m were laid on compressible foam pads and covered in a fleece-backed vinyl sheeting. The total thickness is 40 mm, which provides sound insulation and the added sponginess required. Acoustic lining
Hard concrete wall surfaces in the dance studios were covered in a grey sound-absorbent rockwool panels and lined with grey Spider fabric, which resembles the concrete below. The fabric, from Swiss firm Baumann, was stapled to battens on the concrete.