A young man is sitting in the corner of the Klimaka hostel, rocking himself against his knees in a slow repetitive rhythm. In the hostel's office a woman resident is being treated, having just been assaulted by him.

A vine grows above the yellow painted walls and green woodwork where men and women gather. They are the homeless people of Athens. Sitting among them are Petros Papadopolous and Leonidas Samios, but the stories of these two men are very different from many of the other residents. Rough sleepers who have found a bed, they are neither habitual drug users nor suffering from mental illness, unlike most of those who use the hostel.

Papadopolous and Samios are ordinary working men who have been undone by Greece's financial crisis in a country where, according to official data, unemployment is expected to climb to between 17% and 18% by the end of 2011, a figure that in reality could be as much as 5% higher. And in a country with some of the weakest social provision in Europe, whose government is pushing through a stringent austerity programme, the consequence has been the creation of a new poor, some of whom have been forced on to the streets. While the two men are happy to be photographed, the names they supply are not their own. Both are too ashamed to let their families know they are homeless.

They represent what social workers in Greece have described as an "unprecedented" surge in homelessness.

Small business owners have been made bankrupt, and entire families put on the streets. New graduates have been documented among those sleeping rough. And according to workers at the hostel, each week it welcomes two new people, amid fears that the phenomenon of the new homeless could take on "explosive proportions" if the financial crisis continues.

Indeed, according to figures compiled earlier this year by both Klimaka and the Red Cross, some 20,000 people are now living on Greece's streets, including destitute immigrants and native Greeks. Papadopolous, aged 39, is a chef. He bought a flat and – unlike so many in Greece – was fully paid up on his welfare insurance.

But in Greece today that can be a curse as much as a blessing. Because of his age, how long he has worked, and his amount of contributions, anyone seeking to employ him now would have to pay a minimum of €1,300 a month. In the current climate no one wants to do that.

"I bought my place with a loan from bank in February 2010. Then I lost my job. I worked in hotels and restaurants. But in the last restaurant I worked they told me to my face that they wanted younger, cheaper people. They told me because of the crisis they could not keep the restaurant going paying me what I was getting." So he lost his job.

"I had insurance so I managed to pay the mortgage for two months. The bank gave me six more and then they repossessed it with all my possessions except what they said I could carry out of the door, which was a bag of clothes.

"I stayed with friends for a couple of months, then it was on the streets."

Not knowing what to do, Petros Papadopolous began walking. "I wanted to kill myself at first. But then I found an empty building and I cleaned up a room.

"I found a mattress on the street to sleep on. I slept from midnight to six. The rest of the time I spent walking, looking for food."

His troubles are not over. Because the bank sold the flat for €40,000 less than it was worth, he owes them.

Even if he can find work he has been told the bank will take half his salary. And he is not optimistic about finding employment in a city where many smaller restaurants have laid off staff, and use family members to keep them running. Samios had worked all his life as a house painter and builder when the crisis came. "I've worked since I was 16 years old. It was the first time that I had ever not worked."

That was three years ago, when his problems began. And unlike Papadopolous, who had paid his insurance, Samios had asked to be given the money that should have been contributed by the companies that employed him as cash in hand because he earned so little. "It wasn't really legal," he admits ruefully, but it was common. When trouble came it meant he was entitled to no benefits at all.

"I was renting and I had enough money to pay rent for a year after I lost my job. After that I ended up sleeping in the streets." With some other men he made his home in a covered alleyway.

He is a proud man. "I lost my parents. I do have a brother who lives on one of the islands who could help me," he admits, "but I don't want to tell him that I am homeless."

So Samios, like Papadopolous, survived by eating at government foodlines, some of which provided weekly showers, until he heard of Klimaka and found a bed at the hostel.

"There are other men from the alley who are coming here [he points to a man with a plastic shopping bag]. They are just like me."