Hello serdar and welcome to the group!
The cheapest hostels (called a "hostal" in Spanish) in Madrid don't have websites so they're harder to find. However, have you looked over the thread in this same forum under the heading of "Hostels for 2000 pesetas or under.." yet? One of the postings there mentions a couple by name.
I think the cheapest hostel on my Madrid Hostels page @ http://www.madridman.com/madridhostels.html
would be Hostal Aliste. I've even received a few positive emails of feedback about them.
If the price is the only factor why not consider a youth-hostel? Actually, I don't think Hostal Aliste is much more than a standard youth-hostel, but it's your choice.
A reservation would be a good idea, especially since the Feria de San Isidro, the monthlong bullfighting festival in Madrid, just began.
Still, with the hundreds and hundreds of hostels that are in Madrid I'm sure you could just walk from one to the next (WITH your bags) and eventually find one that has space available and fits your budget.
Have a great time!!
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