You simply need to replace the rubber fuel line, because the rubber has gone old and perished, allowing fuel to leak.
Something like this would be a good start
http://cgi.ebay.co.uk/VW-Bay-Van-Devon-Westy-SAE-R9-Fuel-Hose-STAINLESS-Clips_W0QQitemZ380142086701QQcmdZViewItemQQptZUK_CarsParts_Vehicles_CarParts_SM?hash=item58823bea2d" onclick="window.open(this.href);return false;
You might be able to get the parts cheaper elsewhere, but if buying from a motor factor, make sure you get 5.6mm inner diameter R7 or R9 grade fuel line (R6 is not good with modern unleaded). The grade will be written on the hose.
What you have on there has a cotton overbraid to the rubber hose. The cotton overbraid isn't necessary, and in fact can hide any problems until the hose has severely perished - so it doesn't matter if what you replace it with is overbraided or not.
Simply clamp the pipe further up (nearer to the tank) to prevent your tank emptying, undo the hose clamps at each end of the rubber piece you're replacing, pull the rubber bit out, and fit the new one, remembering to ensure the fuel hose clips are tightened securely, and that there is a clamp on every join.
This was the fuel line on my bus when I got it... not surprising it smelt of fuel.
If in doubt, it is a good idea to drain the tank fully into a suitable container/containers, and replace ALL of the rubber hoses for new. There should be a metal line which goes through the engine tinware, with a grommet to prevent it rubbing. Make sure you have a good quality fuel filter, preferably fitted above the gearbox (not in the engine bay) and certainly fitted BEFORE the fuel pump, not after.
As an aside, the metal fuel line which goes through into the engine bay should be clipped into a plastic clip on the fanshroud, with the HT leads, like so:
Keeps things tidy in the engine bay