1. Mellow Yellow, Rio de Janeiro, Brazil
Alongside Milhouse in Buenos Aires (see below), Mellow Yellow is South America's most famous party hostel. The dorms are standard fare, including two huge "bunk-bed city" dorms with eight triple-decker bunks, but the emphasis here isn't on sleep — this is one- star accommodation, five-star atmosphere. The top floor bar descends into boozy bedlam on a nightly basis thanks to R$5 (£1.38) caipirinhas and mojitos, often followed by mass trips to the trendy zone, Lapa, where the party continues into the little hours. The hot tub on the veranda is a surprising added extra, and there's a rather large beach a few minutes walk away. Goes by the name of Copacabana. Heard of it?
· Beds from R$30 (£8.30) pn B&B
2. Tucano House, Florianópolis, Brazil
Opened this November, Tucano House is a charming little number on a residential backstreet in Lagoa de Conceição, Florianópolis' second biggest town. The hostel is run by the lovely Caio and Marilia Capela, twenty-something siblings who have grown up on the island. Be sure to follow any of their tips, whether wandering along the banks of the lagoon, trekking through Atlantic forest to find secluded beaches on the southern coast of the island, or gorging on açaí (thick fruit smoothies) while watching the beautiful people on Praia Mole, the island's most famous beach and surfing spot.
· Beds from R$30 (£8.30) pn B&B
3. Cabo Polonio Hostel, Cabo Polonio, Uruguay
A wooden shack with three stucco rooms for visitors, the Cabo Polonio hostel is something of a Robinson Crusoe experience. The community of hippies and fishermen isn't accessed by any roads, necessitating a half-an-hour truck ride from the coastal road to the peninsular, and be sure to take a torch - there isn't any electricity once you get there. By night, Alfredo, the hostel's Argentinean owner, cooks up dinner by candlelight, usually involving fresh-caught fish served on the wooden front porch. Once a trained chef, Alfredo's nosh is worth the journey alone.
· Beds from $220 UR (£5) pn B&B
4. Milhouse, Buenos Aires, Argentina
The ground floor bar at Milhouse usually gets going around midnight. By 2am, people will be talking about heading out for the evening, and by 3am they may or may not make it - few party hostels go as hard as Milhouse. But beyond the debauchery lies an architectural surprise. The hostel is in a three-storey colonial building in the heart of Buenos Aires' downtown, with each room set under high ceilings surrounding a gorgeous open-air atrium in the middle of the block. BA's political and religious centre, the Plaza de Mayo, is at the end of the road, and the restaurants and antique stores of San Telmo are a few minutes' walk away.
· Beds from $45AR (£7) pn B&B
5. Che Legarto, Ilha Grande, Brazil
The best budget option on Ilha Grande, two hours south of Rio, lies at the northern edge of the long cove at Abraão, the biggest town on the island. And the best seat in the house is on the balcony on the six-bed room above the wooden deck that reaches out over the water, where you can watch fishing boats zipping in and out of the bay, and see over to the mountains on the opposite shore. Che Lagarto is run by a gaggle of friendly young locals who cook up a mean barbecue every other night, and frequently invite their musical friends to play gigs in the hostel bar.
· Beds from R$25 (£6.90) pn B&B
6. 41 Below, Bariloche, Argentina
41 Below is run by a bunch of friendly Kiwis who help guests arrange ski, board and clothing rental, lessons and transport to Cerro Catedral, one of South America's prime ski centres that looms over the town. Thousands of skiers and boarders descend on Bariloche, on the foothills of the Andes, over the winter months, but savvy backpackers turn up all year round … sunbathing and fishing on the banks of Huapi Lake during the summer, or trekking through the Lake District during the spring.
· Beds from $38 AR (£6) pn B&B
7. America del Sur Hostel, El Calafate, Patagonia
A hugely popular hostel in El Calafate, a small village on the banks of Lake Argentino in Patagonia. Frederico and his staff are famed for their hospitality and assistance in organising trips to the Perito Moreno Glacier and the surrounding towns and treks. The chillout area is the star of the show, with cosy sofas, a wood-burning fireplace and some of the finest views in Patagonia - taking in the town of Calafate (a seven-minute walk down the hill) and the lake beyond. The entire property has underfloor heating, and the newer doubles have their own private baths.
· Beds from $30 AR (£4.80) p B&B
8. Hosteria Kamala, Montañita, Ecuador
In between the coastal villages of Montañita and Manglaralto on Ecuador's Pacific coast, the Kamala Hosteria is a collection of wooden cabañas on the beach. Passion fruit grows wild on the property, are mashed into smoothies and served up to local surfers at the beachfront bar and restaurant. The owners (who arrived in Montañita on holiday four years ago and never left) arrange dive and surf courses, and have a habit of getting guests hideously drunk. Nightly bonfires are lit on the beach, also the site of the Kamala's monthly full moon party.
· 00593 (0)99 423754, kamalahosteria@hotmail.com, beds from $5 (£2.50) pn B&B
9. La Nona B&B, Valparaiso, Chile
A small B&B on Cerro Alegre, the historic heart of the UNESCO-protected city of Valparaiso. The building is one of a number of corrugated tin houses doused in pastel shades on the street, walking distance from plenty of cosmopolitan restaurants and bars, most of which are owned by friends of La Nona's owner. The amiable Renee runs the property as a "home away from home", serving up fresh local coffee and a bumper breakfast each morning, lighting candles in the evening, and running a variety of tours of the city spliced with his own anecdotes.
· Beds from $11 (£5.50) pn B&B
10. The Adventure Brew Hostel, La Paz, Bolivia
A joint venture under Kiwi and Bolivian management, the Adventure Brew Hostel is the most popular hostel in La Paz. Which might have something to do with the microbrewery on the ground floor, and the noisy bar on the rooftop. And maybe something to do with the communal areas on each floor, glass walls letting the light shine through all five levels, unlimited free pancakes for breakfast and a barbecue every night. It's so popular they've had to build an overflow in a grand 1880s residence a few minutes up the road.
· Beds from $6 (£3) pn B&B