This is now my equal favourite solution, alongside the Antarctica one of the Flem-Aths.

Atlantis the continent = South America (right direction from the Strait of Gibraltar, but perhaps a little too big?)

Atlantis the capital city = sunken city in Lake Titicaca, Bolivia

Given all the amazing stuctures nearby, and how well it fits with Plato's descriptions, this is a very neat solution. His book is called "Atlantis: The Andes Solution"

Source: Historic Atlantis in Bolivia