When you think of hostels, you probably imagine a hangout for twenty-something backpackers. (Perhaps hippie backpackers, in particular.)
But many hostels are surprisingly well-suited for families. Double room options are becoming more common in hostels in Europe, for instance. Many have kitchens where some meals can be prepared. Some hostels have bicycles, kayaks, and other equipment that guests can use for free.
London's Telegraph has a round-up of some of these hostels. The article notes that
Around two-thirds of the Youth Hostel Association's 200 hostels in England and Wales offer private family rooms and about 50 have family rooms with ensuite bathrooms.
Rates start at about $70 a room per night. The article says about 14 hostels in Britain have family rooms with double beds, and it recommends that you call the Youth Hostel Association to find out which hostels these are, as the YHA website is unhelpful on this score.
One tip: Only book at a hostel that's been favorably reviewed online at a site such as TripAdvisor and Hosteling International. For example, Hosteling International's San Francisco hostel received many favorable reviews on TripAdvisor, but those reviews also contain some warning signs for families with very young children.