We present the results from an ESO/VLT campaign aimed at studying the afterglow properties of the short/hard gamma ray burst GRB 070707. Observations were carried out at ten different epochs from ~0.5 to ~80 days after the event. The optical flux decayed steeply with a power-law decay index greater than 3, later levelling off at R~27.3 mag; this is likely the emission level of the host galaxy, the faintest yet detected for a short GRB. Spectroscopic observations did not reveal any line features/edges that could unambiguously pinpoint the GRB redshift, but set a limit z < 3.6. In the range of allowed redshifts, the host has a low luminosity, comparable to that of long-duration GRBs. The existence of such faint host galaxies suggests caution when associating short GRBs with bright, offset galaxies, where the true host might just be too dim for detection. The steepness of the decay of the optical afterglow of GRB 070707 challenges external shock models for the optical afterglow of short/hard GRBs. We argue that this behaviour might results from prolonged activity of the central engine or require alternative scenarios.
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