London's Olympic Village will be home to 17,000 athletes this summer and a new community when the Games are over. They'll find a development of long-distance vision marred by short-sighted flaws

The huge housing estate is something that went out of fashion at about the same time as the Osmonds. Its reputation was as low as a British Leyland car or the Nixon presidency, and it was less likely, it seemed, to come back into favour, especially if it was made of concrete and funded by the government. Examples such as the crescent-shaped blocks in Hulme, Manchester or the slabs of the Heygate estate in Elephant and Castle, London have been and are being torn down. Yet thanks to the magic of the Olympics, planned, publicly funded concrete housing on a grand scale has made a comeback. The rather important question is whether it will work.

The athletes' village has been built to house the 17,000 competitors and officials in the Olympic Games, after which it will become a new neighbourhood of about 1,400 affordable homes and another 1,400 for profit. Its success is vital to London 2012's hopes of legacy: if it prospers, office blocks are likely to rise around it and dreams of regeneration – the theoretical justification of the whole Olympic exercise – are more likely to come true.

Most housing nowadays consists of expedient, opportunistic developments thrown up with minimal consideration for the larger area of which they will be a part. The athletes' village is almost alone in including such things as a school, a health clinic and shops, and for being built to a plan by the architects Fletcher Priest, Arup and West 8 that envisages generous and well-maintained landscaping. It includes such radical ideas as balconies that are big enough for a table and chairs and it is made of solid, enduring-looking stuff rather than the ticky-tacky cladding favoured by most urban home-builders.

It seeks to emulate the much-loved planning of Maida Vale and other parts of Victorian west London, where the interiors of blocks are given over to gardens shared by residents. These gardens are raised above street level to allow concealed parking underneath, which is a clever way of keeping cars out of sight. Around the bottom of the blocks are bands of what are called "town houses" – three-storey units with further floors of flats stacked on top of them. The idea is to create "active frontages", to animate the streets by having the units' front doors on them and also to cater for residents who would like a house or at least something house-like.

All this planning is good, even great, given that it is so unusual in new housing developments. Reviving the Maida Vale model is often talked about but rarely done, and although the athletes' village version hasn't quite captured the lushness and generosity of the originals, it is at least there. It is also welcome that there is a degree of calm to the buildings, compared to the frenzied gesticulations, the visual shouts of "buy me, buy me" that typify most works of regeneration.

But it also has to be said that the look of the village is a tad forbidding, not indeed very villagey at all. It consists of a series of cuboid blocks of eight to 12 storeys, clad in prefabricated concrete panels, laid out on a rigid rectangular grid. They are repetitive in form and colour but varied in detail, as some of the country's better-respected housing architects were given the job of variegating the external treatment. Their construction technology is essentially that of those much-criticised estates of the 1960s and of East German plattenbau, though, it's to be hoped, with higher specifications.

Potentially mitigating features, such as pavilions planned for the open areas, have been sliced out by budget savings and opportunities for intimacy or unforced variety are lost. The bands of "row houses", for example, could have been more clearly expressed; as it is, they are submerged by the mass of flats above them. There are the attempts of different architects to liven up the basic formula – some brightly painted panels on some balconies, reproductions of the Elgin marbles embossed on some walls, explorations of the expressive possibilities of rearranging windows – but they can only go so far.

In a former job I helped to select these architects, and they are all fine people, but they struggle to overcome the relentless order of the grid and the construction. Again, there is nothing wrong with regularity, and architects Fletcher Priest cite John Nash's classical facades around London's Regent's Park as a precedent, but Nash had a lightness of touch that has here gone missing.

Meanwhile, although the original masterplan had the best intentions to join up the village with nearby neighbourhoods, it has a disconnected feel. If you want to walk to the centre of Stratford, and the tube station, you must first cross the giant concrete trench of Stratford International station and then creep round the inhospitable edge of the Westfield shopping centre or else plunge through the middle of its shopathon.

Westfield, meanwhile, presents an unlovely wall and roofscape of car parks to the new housing. All this construction – many billions worth of station, shopping and housing – has been delivered in the past few years, with the help of public money and the close oversight of public planning authorities, yet it does not feel like a work of unified intelligence.

The strengths and weaknesses of the athletes' village reflect the way it was achieved. It started off, in the mid-90s, as a bold plan by the developers Chelsfield for a "new metropolitan centre", with homes, offices and shopping, which was drawn up over six years of planning and consultation. In 2005, London won the bid for the 2012 games, while Chelsfield and its properties were sold and resold. Westfield took over the shopping part while another company, Lend Lease, took over the housing.

When the credit crunch hit, Lend Lease decided it could not raise the money to build the village, so the government took it over. Now it has been sold back to the private sector, in the form of Qatari Diar and the British company Delancey, which will take it over after the games.

This history is reflected in the fabric. Because the shopping and the housing are in separate ownerships, there is not much care given to the way they join up. As there were different owners at different times, original intentions have been imperfectly followed through. Due to the rush to complete in time for the Olympics, and because the International Olympic Committee has exacting standards for athletes' accommodation, standardised plans and prefabricated construction were used.

There was also little time to reflect on and reconsider Fletcher Priest's somewhat schematic and regimented arrangement of blocks. Because the government took over the development, and was nervous about risk, it paid a very large fee to the project manager CLM, which seems to have squeezed out some of the more life-enhancing aspects of the design.

But it is there, a rare example of a planned housing development that, for all its flaws, shows more thought and quality than most things comparable built in Britain in recent decades. Importantly, the plan is to rent rather then sell the homes, which improves its prospects of success. It means that Qatari Diar has an incentive to maintain its open spaces and that the village is likely to fill up more quickly than it would if it relied on thousands of individual homeowners to stake their mortgages and deposits on what is a pioneering location.

Much of London, including Maida Vale, was built on the basis of large landowners putting up developments to rent, and it would be no bad thing if the village sets a precedent for moving away from our fixation with home ownership. It should not, however, require an Olympic Games to achieve it.