I recommend guesthouse Bina for anyone looking for budget accommodation in Reykjavik. This is a B&B type establishment in a modern apartment building in a pleasant suburb of the town. My room was very small, but perfectly adequate for my needs (as I spent a lot of time out on excursions and visiting the centre). I supplied my own sleeping bag, which made the room very cheap and in my opinion great value. Bina is very hospitable and helpful and a great host. I believe there are frequent buses to the centre although I always chose to walk along the shore (in midsummer, this is a beautiful walk with the the sun above the horizon for something like 22 hours of the day). Bina provides an optional breakfast with a large variety of cereal, fruit juice, cold meat, cheeses and breads . There's also a small bakery close by, which is great for pastries and inexpensive sandwiches. Bikes can be hired from the nearby City Hostel.
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