When David Carter leaves his front door open, passers-by stop and stare and crane their necks to get a better look at the fabulously decorated rooms within. The property, 40 Winks, is claimed to be “the smallest hotel in the world”. Whether this is true or not, the three-bedroom Queen Anne confection (two guest rooms, plus Carter’s “private boudoir”) must surely be one of the most seductive. The interior decorator bought this elegant townhouse in the East End of London 12 years ago as a place to bring up his young family, but any resemblance to conventional family homes ends there.

The house is a fantastical mélange of the terribly grand sprinkled with a soupçon of the voguishly shabby; it’s like a piece of living theatre, exuding wit, charm and glamour. “The house was derelict when I bought it, with no running water or electricity,” says Carter. “It took ten months of major rebuilding and four months to decorate, but how it looks now is pretty true to my original vision.”

Carter got his career break when Minn Hogg, the former editor of World of Interiors magazine, proclaimed him a genius after seeing his first flat 20-odd years ago. “It was Minn who suggested I become an interior decorator,” says Carter. “She promised to publish my first commission and, true to her word, it appeared in the magazine a month after it was finished.” Things snowballed after that, and the commissions started coming in thick and fast. Carter’s passion for his work is remarkable. “I have a commitment to doing something really well, to provide a certain level of work, care and attention to detail. And, of course, I absolutely love it,” he says.

For eight years Carter hired out 40 Winks as a location for fashion and film shoots, during which time he met and befriended many models, art directors and fashion types, all of whom adored his fantasy style. These are the people who now seek out 40 Winks in its new incarnation as an hotel. “Most hotel experiences are simply not interesting or stimulating,” Carter explains. “40 Winks is different. Staying here is like attending a house party in a glamorous London home.”

Dressed in an exquisite bespoke suit and puffing casually on a Camel Light, Carter explains his vision for each room in the house. The basement kitchen, lit by candles and decorated in an elaborate Renaissance style, is inspired by a room in the 16th-century Palazzo Sacchetti in Rome. “Of course, it needed to be functional, but I didn’t want it to be techie and full of appliances,” he says. That said, his little office, off the kitchen, houses a state-of-the-art computer, a rare nod to 21st-century life.

The drawing room has an opium-den vibe, all glossy moss-green walls, sumptuous fur-covered couches and jewel-encrusted cushions. Spidery Gothic mirrors and sexy, hourglass floor-lamps are among the decadent touches, while the original panelling and ebony-stained floorboards add to the opulent richness of it all. Carter is stridently anti-bland. “We’re bombarded by the mundane and dreary most of the time. For me, a house is a space that’s emotional as well as physical; a platform from which to advocate things that are special and wonderful,” he enthuses.

The two guest bedrooms share a stunning gilded bathroom. Carter’s bedroom is known as the Dangerous Liaisons boudoir. Dripping with Marie Antoinette satin bolsters and oval portraits, it even contains a powdered wig from Ungaro’s window display. “A friend who works in fashion called them to ask if I could buy it, and they gave it to me for free,” says Carter. That Naomi Campbell’s name was stitched in the back was a much valued bonus.

A cultural programme of themed events is taking shape. “The bedtime story nights have been a huge success and we’re launching Tart, an afternoon of fun and frivolity, next week,” says Carter. “In these credit-crunch times, people need pampering. Here, for not huge amounts of cash, you can hang your hat, park your suitcase and enjoy a little understated opulence in the world’s most exciting city.”

40winks.org

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