The neighborhood is a labyrinth of filthy alleys winding past clumsily built shacks and grubby tents. It stinks of garbage and urine. A woman shampoos her long hair in a public fountain. Young men lean on a wall and mainline heroin in broad daylight.

This is Casal Ventoso, the Portuguese capital's notorious drug district, a slum layered on the slopes of one of Lisbon's seven hills where poor families live side-by-side with the drug trade.

But after more than a decade as a narcotics haven, the neighborhood is gradually being cleaned up and turned into a leafy and lawned "green zone." The government is demolishing the shacks and expects to move the remaining 1,200 families into brand-new homes by the end of next year. About a third of the 50-acre slum has been cleared, and 800 people are already living in new houses.

Rodrigo Coutinho, a physician who works at a shelter for homeless drug addicts from Casal Ventoso, considers it the most virulent drug quarter in Europe. At one point, up to 5,000 people poured in every day to buy drugs, he says. "It was the country's main drug supermarket."

Around the clock, long lines still form in front of several traffickers as dozens, sometimes hundreds, of people wait their turn to pay 2,500 escudos ($11.25) for a brown or white package containing 0.25 grams (0.01 ounces) of heroin or cocaine. Visitors are eyed suspiciously by some. Others just see potential buyers. Dealers shout enticingly, their voices competing in loud bidding: "Come, come."

Police stage frequent raids in the slum, but most of the time the dealers are alerted by lookouts before officers can move in.

Nearby, a swarm of addicts sell drug paraphernalia--aluminum foil, cotton wool and syringes, while health workers identified by their yellow vests exchange used syringes for new ones, free, as part of an effort to stanch the spread of AIDS.

Miguel, a former drug addict who lived in Casal Ventoso for two months, says that six years ago there were dozens of shacks that served as "shooting galleries." Asking to be identified only by his first name, Miguel becomes fidgety as he recalls the time he spent in the area, sleeping on a bench in a shack and running errands for the owner.

"It was like being in prison," the 33-year-old says. "When you're there, you're jailed; you're imprisoned by the powder."

There are no official figures for the number of drug users in Portugal. Coutinho estimates 100,000 people--about 1 percent of the population--are dependent on heroin, the most prevalent drug here.