It's chastening to realise that, since Soft City's first publication in 1974, the book's citizens, nearly all in their go-getting 20s and 30s, have moved on to the world of bus passes, if not the Great Beyond. It's sic transit gloria mundi time for the pioneer knockers-through who gentrified Islington, the vegan squatters of Notting Hill with their I-Chings and ouija boards, the band of young writers in the Pillars of Hercules pub on Greek Street, the rival salons of Holland Park. The girls who affected granny glasses are grannies themselves now. I live in Seattle, where I moved in 1990, and so my increasingly imaginary London still has Muriel Belcher presiding over the Colony Room, otherwise plain "Muriel's", and Gaston over the French Pub, you can lunch at Mario and Franco's Trattoria Terrazza ("The Trat"), two can dine at L'Escargot, with a carafe of house red, for around £7 (or five review-copies sold to the literary knackers' yard, owned by another Gaston, off Chancery Lane), and you can still smoke on the Tube.

Yet in Soft City I was trying to write about metropolitan life as it had existed since the 18th century - as a theatre in which the newly arrived could try on masks and identities more daring and extravagant than any they had been allowed in their villages or small towns, as a place that guaranteed a blessed privacy, anonymity and freedom to its inhabitants and, most of all, as somewhere where every citizen created a route of his or her own through its potentially infinite labyrinth of streets, arranging the city around them to their own unique pattern. That was why it was soft, amenable to the play of each of its residents' imagination and personal usage. A town, even a large one, imposes on its people certain fixed patterns of movement and, with them, a set of rather narrow expectations of what kind of character you're permitted there. If I live in Worksop, Worksop largely defines me; if I live in a great city like London or New York, I can make the city up as I go along, shaping it to my own habits and fancies. In an article published a few weeks ago in London's Evening Standard, David Sexton cited Soft City and nicely summed up its essential argument in one sentence, writing that the book was about "how we all construct our own different versions of London, in our imaginations joining up the streets and places each of us knows, so that associations and familiarities matter more than the map and thus we all mould for ourselves a different city in which to live". Aboard his newly bought bicycle, Sexton was busily discovering the intricate geography of his own soft city.

I'm delighted to learn that that's still possible for him, for cities have become harder, less humanly plastic in the past 30 years. My London was far seedier than it is now - an immense honeycomb of relatively inexpensive flats and bedsits, mostly contained by the perimeter of the Circle Line. It was a place where immigrants and the impecunious young could still afford to live within walking distance of Hyde Park Corner, quarrying out nooks and crannies for themselves in Victorian houses originally designed for large families and their servants. The Earls Court square on which I lived when I was writing the book was as diverse and cosmopolitan as any place I've known: it was home to Arabs in dishdashas; gays in leather gear, waiting for the Coleherne pub to open; out-of-work actors; titled diplomats; jobbing plumbers; microskirted prostitutes in fishnet stockings; Australian students; Italian waiters; and the most famous American poet of his age. I see that a rather poky-looking one-bedroom flat on Redcliffe Square is now on the market for a cool half-million pounds, which would put it impossibly beyond the reach of nearly all the characters I knew when I was there. The £10-a-week rents in districts like North Kensington and Ladbroke Grove have mushroomed to around £400 (had rents followed the declining value of the pound, £10 then would be a fraction less than £50 now).

The inevitable consequence is that diversity is being driven from the central city to its remote peripheries - a trend that is reflected in metropolitan areas around the world. Here in Seattle, for instance, to find good Indian, Chinese or Korean restaurants one now has to make a 20-mile drive into the suburbs, which is where immigrants, along with artists, students, freelance writers and other natural denizens of the soft city are increasingly moving because they can't afford the alpine rents of downtown. The densely populated inner-urban honeycomb - what Henry James, writing of London, once called "the most complete compendium in the world" - has become so expensively reconstructed, so tarted-up, that only people with a merchant banker's income will soon be able to live there, outside of the steadily diminishing supply of low-rent public housing.

In the soft city - whether it was Dr Johnson's, Dickens's or my London - the rich lived cheek-by-jowl with the poor, a source of daily interest and entertainment to both parties. In Victorian times, even posh new areas like Belgravia had mewses tucked behind their grandiose stucco mansions, where stable boys, with lurchers at their heels, and coach repairers hung out amid the washing strung on lines and the ever-present stink of horse manure. Even in my time, there were still a few defiant survivors from that working-class world, as in the South Kensington mews to which I used to take my car for repair by an elderly mechanic who had his rented cottage-workshop there, as if he'd weathered the transition from coaches to horseless carriages. My bet is that his modest digs are now priced at £1.2m plus, to go by current offerings in the vicinity.

One essential element of soft-citydom remains unchanged: just as you're free to create your own unique paths through the honeycomb, so you can create your own community. In suburbia, you're stuck with your neighbours, and with the same bores you ran into over dinner last month and the month before. In a metropolitan city, you may well not know the names of the people living next door, or on the floor above; your true neighbours are scattered through the inner postal districts, connected by a spiderweb of phone lines (and now by texting and e-mail). I used to see "my" London as a circuit board whose electronic layout was my secret.

Friends X, Y and Z were unknown to each other and unlikely ever to meet, but each was a close neighbour in my personal, improvised London community. We'd connect at different pubs and restaurants, widely spaced across the physical fabric of the city, each one a "local" for a particular friendship.

As someone who grew up in a succession of small towns and cathedral cities, subject to the confining social constraints of such places, living in London was an exhilarating liberation for me. In a third-hand green MG Midget, I learned its back streets as assiduously as any cab driver preparing for The Knowledge, and found poetry in its place names, from The Angel to Pimlico and Parsons Green, from Shepherd's Bush to Limehouse. In Iris Murdoch's 1954 novel Under the Net, there's a running philosophical joke in which north London is "necessary" and south London is "contingent", which is exactly how it felt to me. South of the river, I was lost, navigating by the London A-Z on cautious excursions to Clapham, Catford, Brixton and Battersea, each place intimately associated with a friend who, so far as I was concerned, might as well have chosen to live in Sevenoaks or Guildford. But all of London north of the Thames felt like home to me. I joined the London Library and mugged up on the city's fantastically complicated social history, and could once name every major speculative builder and architect in the 19th century, and explain precisely how and when London's high life moved westward from Grosvenor Square to Belgrave Square and Bayswater (the "wrong" side of the park). Living rather well on a spotty but sufficient income made mostly by writing book reviews and plays for radio and television, I gypsied from quarter to quarter, picking up acquaintances, trying to absorb the peculiar atmosphere of each district, filling notebooks with scenes encountered on my inner-city travels.

Soft City, published just over four years after I first arrived, was meant both as a celebration of my own sense of intoxicating freedom in the city and as an attempt to connect my London life with those of James Boswell, biographer of Johnson and a comically dissolute man about town, Dickens, Mayhew and General William Booth, author of In Darkest London and the Way Out. I found my city every bit as enthralling as theirs, and hoped that my book, in its quaint 20th-century binding, might be happened upon by some future researcher in the London Library: turning its faintly mildewed pages, he or she would light on a familiar name - Earls Court ... Highgate ... King's Road ... Portobello ... Ah, that's how it was then.

Nowadays, as a visitor to London, I still recognise the city I used to live in but in postal districts far from my old haunts. Streatham High Road, for instance, not long ago voted "Britain's Worst Street", seems eerily familiar, in its babel of languages and accents, its walk-up flats above the lines of shops, its gentrifiers in their Range Rovers, dolling up the susbstantial Victorian houses just west of it, the students in its Indian restaurants, its parade of experimental fashions, its pure cityness. I can imagine myself living there, as I cannot any more in Earls Court or South Kensington, where I stare with disbelief into estate agents' windows and feel the urge to cry - not just for the prices displayed there but for the single-class, moneyed homogeneity that has overtaken quarters once so excitingly diverse. If I were to move to London now, I'd go south - a long way south - of the river; in driving time at least, halfway to Brighton.

But things have changed in ways as unimaginable by me as by Dickens or Mayhew. I came to London in search of an elective community of my own making, looking for like minds. I ached for escape from the genteel, academic conventions of the town I then lived in (Norwich). I wanted to be part of the kaleidoscopic human variety to be found only in a metropolitan city; and, in 1969, that meant London. Like Dick Whittington on Highgate Hill, I was summoned there by bells. In Margaret Drabble's Jerusalem the Golden (1967), a novel I devoured when it first came out, the provincial Yorkshire heroine hears the famous hymn of the title as a paean to London: "I know not, oh, I know not, what social joys are there,/ What radiancy of glory, what light beyond compare." London's imagined social joys lured me exactly as they did Clara Maugham - and turned out to be surprisingly real.

Now, in Seattle, I watch my nearly-16-year-old daughter lost to MySpace and Facebook. Her time is spent in an elective community of exactly the kind I once sought in the big city: she's "social networking" with friends in Seattle, New York, San Francisco, Copenhagen, Tokyo, along with a multitude of places I've never heard of. That freedom to experiment with personae, to play out fantasies of self, once the unique gift of the metropolis, is available on everyone's laptop, as they masquerade anonymously behind screen names and avatars.

Cyberspace is lamentably short of restaurants and drinking clubs, and its two-dimensional architecture doesn't strike me as much fun, though its fine retail district combines the virtues of Old Bond Street and Petticoat Lane. You can't eat dinner there but it meets, in virtual form, almost all the conditions of a true soft city, and does so on a global scale, as cosmopolitan as any provincial isolate could dream of. In Concrete, Washington, or in Goole in Humberside, you can enter it with a mouse-click; so maybe, thanks to the internet, we're all freed - somewhat - of the burning necessity to move to South Ken.