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Panter Hudspith was established in 1987 by Simon Hudspith and Mark Panter. The practice has just completed the new City and County Museum near the cathedral in Lincoln and is currently working on mixed-use developments in the centres of Bradford, Cambridge, Exeter and Oxford.

Reporting for the Architectural Review in 1933, John Betjeman (then on the staff of the AR) was impressed by the newly opened Civic Hall in Leeds - 'as the sightseer wanders among the hotchpotch of commercial styles around Infirmary Street and the City Square, he suddenly catches a glimpse of one or other brilliant white steeple, rising above tram lines and turrets, terminating an otherwise dreary street'. Designed by E Vincent Harris, the Civic Hall was conceived as a shot in the arm for a city beginning to feel the effects of the Depression. Government grants, intended to provide work for the unemployed, helped to fund the project.

The building is now recognised as an outstanding example of inter-war traditionalism, constructed of richly decorated Portland stone on a steel frame.

The Civic Hall was part of an ambitious strategy for recasting the centre of Leeds that also included the Headrow scheme, 'the Regent Street of the North', and Quarry Hill Flats, the heroic Modernist housing complex sadly demolished in the late '70s. Harris's building housed the council chamber, committee rooms, a formal reception suite and much-needed municipal offices, leaving Cuthbert Brodrick's 1850s Town Hall, with its splendid concert hall, in use principally as law courts.

The site for the new building was created by demolishing an area of substandard housing and industrial premises. To provide an appropriate setting, a new street was laid out, slicing abruptly through the run of Victorian buildings on Great George Street.

Formal gardens in front of the Civic Hall were framed by the new Brotherton Wing of Leeds Infirmary, completed soon after the outbreak of the Second World War. There were plans for other new public buildings, including an art gallery and library, in what was to become a civic quarter, but war put further plans for the area on hold. It remained in limbo six decades later: the Civic Hall faced the rear of the increasingly dilapidated run of 19th-century buildings, now listed, on Great George Street to the south, with an untidy car park (on the site of the demolished public baths) to the east.

This was the scenario confronting Leeds' Civic Architect John Thorp when he began developing ideas for a new public space (which became Millennium Square) in front of the Civic Hall. Funded by the Millennium Lottery, the square opened in 2000. Harris's formal gardens and the roads around them have gone and the new square extends across Cookridge Street to embrace Brodrick's Leeds Institute (currently being converted by Austin-Smith: Lord to house the city museum). It is a heavily used space: in the run-up to Christmas, for example, a German market operates there, followed in the New Year by an ice rink.

(If anything, it is too heavily used, so that its spatial qualities are too rarely appreciated. ) Panter Hudspith Architects' Carriageworks Theatre and the adjacent block of listed buildings, newly refurbished, form an appropriate complement to the square.

The two projects are effectively two phases of a concerted exercise in urban regeneration.

Panter Hudspith won the job after an architect/developer competition in 1999. The Millennium Commission had sensibly insisted, as a condition of its grant for the new square, that the rundown buildings on Great George Street be renovated and put to a suitable new use. As a first move, the city council provided funds for external repairs and the roofing over (in a rather heavy manner) of the central courtyard in the former carriage works that forms the centrepiece of the block, before inviting proposals from developers.

'We were not obliged to accept the highest bid, ' says Thorp. 'The buildings had to be accessible to the public - we ruled out several schemes that envisaged conversion to flats and offices.' Panter Hudspith's scheme, with Asda St James as client, included an element of residential use but also offered the prospect of a new three-screen cinema in the mould of the City Screen that the practice had designed in York. 'We were trying to pack too much into the site, ' Simon Hudspith admits. The cinema simply did not fit. The emergence of the city museum project, largely funded by the Heritage Lottery, injected a new ingredient into the scheme, since it required the removal of the city's Civic Theatre, serving a large number of amateur organisations, from Brodrick's Institute, where it had occupied the central auditorium for half a century. The amateurs, incensed at the prospect of being evicted, demanded a new theatre on a city-centre site.

In due course, a deal was done between the city and the developer to substitute a replacement theatre, subsequently named the Carriageworks, for the cinema. The final scheme went on site in summer 2003.

The theatre is an entirely new structure, constructed on a vacant plot. With a bar/restaurant at ground level, it houses a highly flexible 350-seat auditorium which, with a smaller 80-seat performance space, foyers and bars, occupies the remainder of the new building, with dressing rooms, rehearsal spaces, workshops and offices for the theatre spilling over into adjacent buildings in an ingenious interlocking of old and new. The structural problems involved were, Simon Hudspith recalls, considerable, so that a great deal of rebuilding and an element of facadism in the finished product were inevitable.

Accommodating the theatre meant demolishing the north-west corner of the carriageworks, while the elevation to Millennium Square has had a floor added, a seamless operation using matching brick. Bars and restaurants, their fit-out essentially ephemeral, occupy the ground floor and some mezzanine spaces, with the roofed-over courtyard as the focus of the development.

The largest and most impressive of the listed buildings, the former Electric Press, at the corner of Great George Street and Cookridge Street, has been let to Leeds Metropolitan University. Sadly, Panter Hudspith's work there extends no further than the impressive new staircase, a bold intervention that does not compromise the original industrial structure. Elsewhere, the splendid timber and iron interior of the building has been overlaid with a flimsy and inappropriate fit-out, a mess of corridors, small rooms and suspended ceilings. More sympathetically treated, the building could have provided an inspirational home for the students of film and television who study in it.

Externally, the theatre responds to its varied context with a facade clad in Portland stone addressing the Civic Hall.

It is a skilful design, civic in an entirely modern manner, but respectful of Harris's monumental Classicism. The western elevation, facing the informal space known as Mandela Gardens, is clad in brick with stone dressings. The principal facade, slightly concave in form and framed by sharply angled corners, includes substantial areas of glazing - views out from foyers and bars are an unusual feature of a theatre - with a large and prominent projection screen. The intention was for the screen to slot neatly into a panel in the facade, but the present installation projects awkwardly. The entrance to the theatre from Millennium Square is in one of the refurbished Victorian buildings - it is rather too discreet and not an obvious point of entry.

The internal finishes of the theatre are simple and economical - painted blockwork is the predominant material.

There are absolutely no frills in the fit-out (the work of John Thorp's team) but this is a facility that many professionals would covet: it is certainly a gift to the amateur and student groups that will be using it. Professional luvvies would doubtless find the dressing rooms rather basic - they reflect the accommodation problems of the site - but they are a vast improvement on those in the old Civic Theatre.

The difficulties posed by the site would have been considerably eased, Simon Hudspith argues, had Leeds planners and English Heritage been prepared to consider the demolition of the late Victorian building adjoining the theatre to the west.

A chance survival and lacking the architectural distinction of the other buildings in the block, it could have been sacrificed, but was deemed sacrosanct.

Panter Hudspith's skill in slotting a substantial new building into an existing urban block is beyond dispute - the fly-tower, for example, is 'submerged' into the complex. The practice is acquiring a reputation for this sort of thing, usually working in traditionally 'historic' towns such as York, Lincoln, Exeter and Cambridge. It is a measure of the revolution in Leeds' thinking about its own identity that an area of the city that was until recently a forlorn remnant, the subject of comprehensive redevelopment proposals as late as the 1980s, has now become a pivotal public place.

The Carriageworks project, injecting new life into an empty block, is above all the key move in what John Thorp calls the 'living chess game' (with buildings as the pieces) that has finally given substance to the vision of a 'civic quarter' for Leeds.

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