Hostel Name: East Timor Backpackers.
Address: Avenida Almirante Americo Tomas, Dili, East Timor.
[Edit: The East Timor Backpackers hostel has since closed. If you are looking for a hostel in Dili there is now Dili Central Backpackers.]
The East Timor Backpackers hostel was the only hostel in Dili at the time of my visit in May 2014.
I booked a private double room via www.easttimorbackpackers.com and the room was $25USD per night. There are also single rooms and dorm rooms available. I booked a few days in advance and only the double was available so if you want a private single room, book ahead.
The private room is shared bathroom only.
I don’t usually stay at hostels in Asia as guesthouses are better value. Prices in Timor though are noticeably higher than the rest of Southeast Asia and hotels here are more expensive than in West Timor, Indonesia.
I enjoyed staying at this hostel. It reminded me of when I first started staying at hostels and meeting interesting people from around the world. Dili seemed to attract a more intrepid type of traveller; people who have been everywhere but weren’t bragging about it. With Dili being a port for cargo ships to Darwin, it has become the place for long distance motorcycle riders to hitch a ride to Australia.
The hostel itself is located in a central part of the city. The city is small anyway so it’s easy enough to walk around to points of interest.
There was no breakfast here which would have been convenient. Even it was available as for purchase it would still do well as there is nothing open in the area early in the morning. There is a kitchen for self caterers and there is a 24 hour convenience store nearby.
There is free wifi which worked as fast (which is to say slow) as any other wifi on offer in Dili. (As at 2014 the internet is painfully slow in East Timor).
If you prefer to stay in a hotel, search for hotels in Dili.