The sign said that it was an Oxfam shop, but something was not quite right. There were no dodgy pullovers, no shelves full of chipped china and the only pair of flowery curtains on display had been transformed into a one-off Giles Deacon dress.

Yet sure enough, the newest hip store in swanky Westbourne Grove, West London, is indeed an Oxfam shop. Or rather an Oxfam “boutique”.

When the Westbourne Grove shop reopens its doors on Saturday, World Fair Trade Day, after a dramatic make-over, it will be the first step in the charity’s new attempt to invade the wardrobes of fashionistas everywhere.

Swapping bric-a-brac for Fair Trade frocks, organic fibres and contributions from budding young designers at the London School of Fashion, the shop will raise funds while providing the trend-conscious with this season’s must-have look: eco-chic.

It will stock ethical labels such as People Tree and Amana alongside donated clothing that has been rebranded “Loved for Longer”, all of which fashionably green shoppers can browse while standing on reclaimed hospital flooring under low-energy lighting.

Big-name designers including Deacon, Stephen Jones and Christopher Kane have created one-off pieces from items they found while rummaging in an Oxfam shop, which were unveiled yesterday to a waiting press pack amid cries of “This is fabulous!” and will be auctioned on eBay. Further boutiques are to open in Chelsea and Chiswick, and Sarah Farquhar, head of retail at Oxfam, hopes to open a national network of up to 25 such shops within two years.

All of which marks a dramatic change of image from the stereotype of dank-smelling cardigans and strangely patterned blouses with £2.50 price-tags.

In fact, with dresses for £165 and shoes for £240, much of the colourful stock at Westbourne Grove is considerably more cheerful than it is cheap.

But Ms Farquhar insists that exclusivity is not what the boutiques are about. “We are doing it to be inclusive,” she said, expressing her hope that the new-look shop and others like it will entice a whole new breed of Oxfam shopper.

“A lot of people didn’t shop in our shops because of all the stereotypes,” she said, although noting that this is something that is already starting to change. “We are seeing more people who choose to shop in Oxfam rather than who need to.”

As awareness of the true cost of cheap fashion grows, she said, more people “don’t actually want people living in poverty to create them a T-shirt. They have very much got this idea of sustainability.” The rise of ethical fashion has allowed Oxfam to dream of becoming, in a small way, the next Topshop. That dream has been furthered considerably by the involvement of Jane Shepherdson, the chain’s former brand director, who is credited with turning Topshop into one of the high street’s biggest forces, as a “creative consultant” on the boutiques project.

Ms Shepherdson is not convinced that ethical fashion has taken hold across the mass market, but said “there is a core of people that is probably growing who are concerned and who would probably like it make easier” to buy clothes with a clear conscience.

The current economic gloom, she added, may further the trend towards sustainable rather than cheap, throw-away fashion. “You do find in a recession that purchases are more considered, things that last,” she said.

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