Last week I was in KL and I stayed in a hostel called "Backhome". When I was there I found that it was popular with backpackers from many countries. The rent is cheap, abour RM46 per night.(About USD15). The place is clean too. You get the basic bed in fours, three and two. The type for four persons to a room is cheaper. It is located at Jalan Tun.H.S Lee, just a few minutes walk from Masjid Jamek, LRT station.(Light Rail Transport). Real convenient. If you don't mind staying with strangers, you can try this hostel.
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