'In France, art is made by an elite, for an elite. The point of a squat project is not to have a gallery, but a space accessible to alternative creators and also open to the public,' says Pierre Manguin, one of the presidents of Interface, the association of Parisian art collectives and 'art squats'.

This summer, for public safety reasons, the Paris mayor's office locked the door of the city's most famous squat, Chez Robert, home to the artists' collective Electron Libre in a run-down six-storey apartment building above a row of shops in the busy Rue de Rivoli.

Since three artists first moved there in 1999 the art squat - or 'squart' - had become a hugely popular cultural venue receiving global media coverage. There were 30 painters and sculptors from all over the world working in the studios, of whom 14 also lived there.

The squat attracted thousands of visitors and tourists who could wander around the cluttered studios, look at the paintings and sculptures and watch and talk to the artists, all without paying an admission fee. The squatters reckon about 300 visiting artists have exhibited their work in the free space on the first floor.

The Rivoli squat offered artists a rent-free artistic environment where they could not only work and sleep but also expose their work to the many people who tramped up and down its stairs. For the public the venue was something quite different from the other galleries in the area, somewhere between a gallery, a meeting place and an art shop.

The artists say that 50,000 people visited the squat every year, making it the third most popular modern art venue in the city after the Pompidou centre and the Jeu de Paume gallery just down the street. 'We haven't confirmed those figures officially,' says Laurent Amiend, a spokesman for the mayor's culture department. 'But we know it was very popular and there were many visitors.'

Whatever the actual figure, the squat became a victim of its own success. At first the Rivoli artists were given permission by a judge to stay in the building for six months, but survived there longer, they say, because of the amount of media attention they received. '

'We talk of things being dynamite. This was an atomic bomb,' says Bruno Dumont, a painter and founding member of the squat along with fellow artists Gaspard Delanoë and Kalex, who refer to themselves collectively as KGB.

The city authorities bought the building for €4.6m (£3.2m) in 2002 and let the artists stay there. 'If we hadn't bought the building, the police would have expelled the squatters,' says Amiend. Then, this summer, they decided that the narrow staircases and lack of fire exits meant it would have to be renovated if the public were to continue visiting.

The city hall, under the left-wing mayor Betrand Delanoë and his cultural assistant Christophe Girard, has been looking for solutions to the lack of affordable studio and exhibition space in the city for the past three years. Last year Girard had the first meeting with Interface to discuss ways of helping the city's squatters.

Now the city has decided to spend €3.7m (£2.6m) on renovating 59 Rue de Rivoli. It owns four other squats, including one in an old mirror factory, squatted since March 2003 by artists who were made homeless in a wave of expulsions by private landlords.

Girard's office gives temporary renting contracts to the artists in the squats that it owns, but legitimising their presence in this way goes against the spirit of squatting and does not impress the artists. Although the Rivoli artists are being offered cheap studios to work in, they are disappointed. 'They want to make new "clean" studios, but that's not to our taste,' says Dumont.

Amiend says the mayor's involvement with the squats is aimed at supporting 'new forms of expression' distinct from the institutional museums and galleries. He says the artists will run the place, though there is some confusion among the artists about exactly what their rights will be when the building reopens as an official cultural venue.

The artists themselves fear the renovation will turn the squat into a museum. 'It will lose its soul,' says Kalex, who makes and sells statues from iron and rock. Describing himself more as artisan than an artist, he has to sell the work he produces in the squat as well as exhibiting it.

Manguin of Interface says the squat artists fear it will become part of the 'traditional circuit' of Parisian modern art galleries. 'We are worried it will lose its alternative character,' he says.

The plans for the work on the Rivoli squat, which is scheduled to be finished by 2007, aim to create a set of ten studios for those now working there, with public exhibition space on the ground and first floors. The old building's staircase will be widened and fire exits put in, while the facade of the building, currently decorated with graffiti, banners and a giant moustachioed face made of scrap metal, will be restored.

Since the arrival in 2001 of Girard the city has begun to give more support to squats at a time when artist-squatters complain about the challenge they face from the growth of national 'zero-tolerance' policies.

The city authorities' intervention in the Rue de Rivoli marks a move away from the traditional cycle of police closing down illegal squats and artists moving to different ones, towards a policy of investing in unofficial venues.

The average lifespan of a Parisian squat is estimated to be six to 12 months. But 59 Rivoli has lasted five years and will now become a permanent venue. Interface is sceptical about the benefits of making the Rivoli squat an official venue.

The last time Paris officially invested in renovating a squat, Manguin says, was ten years ago when it bought and renovated studios in an old factory in the east of the city - space intended to be open to the public is now taken up by private studios. He fears Chez Robert will go the same way.

Finding studio and exhibition space is a problem for young artists in cities all over Europe. Several European capitals have art squats that have become officially recognised and supported by the state. In Paris, Interface represents 15 squats and an organised squat movement has existed there for 20 years.

The militant squat movement in Paris is becoming more vocal and organised - in October the third annual Art Squat festival, a three-week series of shows organised by Interface and a modern art venue, the Palais de Tokyo, took place.

'When you democratise the work of artists, the public must be allowed to see it,' says Manguin. A declaration by Interface last year said: 'Despite intimidation, trials and expulsions we have never given up seizing places for alternatives to the official art circuits. We will never give up displaying our work and weaving links with the public.'
Artists' squats in Europe

Kunsthaus Tacheles, Berlin

Tacheles, a derelict department store damaged by bombs during the Second World War, was occupied by a group of squatter artists two months before it was scheduled to be demolished in 1990. Ever since then it has been used for painting and sculpture exhibitions and performing arts, becoming a listed building officially recognised and subsidised by the Berlin government.

Les Bains: Connective, Brussels

The 1950s municipal baths in south-west Brussels has been inhabited since 1997 when artists moved in and made it into a 'socio-artistic laboratory' where visual artists, performers, scientists and botanists live rent-free. They organise exhibitions, concerts and workshops for the public. It has received no culture subsidies except for a grant from Brussels Culture Capital 2000.

Rote Fabrik, Zurich

This spray-paint-covered 19th-century mechanics factory on the edge of a lake was settled by artists in the seventies and became an officially recognised cultural centre in 1980 and a listed monument in 1981. It is run by a committee, which rents studio and exhibition space to artists, performers, musicians and film-makers and receives substantial public subsidies.

Metelkova Mesto, Ljubljana

The former army barracks in Slovenia was a squat after the departure of Yugoslav forces between 1991 and 1996. It is now a multi-purpose public arts venue, describing itself as an 'autonomous cultural centre'. Squatters were evicted and replaced by established artists in 1997 when it was taken over by the city authorities and the culture ministry. It now houses several national museums and galleries as well as an independent collective of 100 young artists and performers.

Pascale Ghyssaert, Ghent

Ghyssaert makes industrial sculptures out of scrap metal and lives in 18 shipping containers currently located on an enclosed piece of wasteground allocated to him by the mayor. He receives social security payments and is given special permission to live in his mobile containers. The enclosure and the containers with the artist's working materials and sculptures are opened to the public each Sunday free of charge.