Affordable Iceland

Iceland has long been famous for its geological wonders, magnificent fjords, kicking nightlife and... sky-high prices. Just over two years ago a bottle of beer in a restaurant would have set you back £6. But Iceland's krona has been falling faster than a lead balloon, so today that beer costs £4.

It's still not cheap, but there's never been a better time to visit this outpost of Europe, which you can do in a long weekend.

Out of this world
Nothing can prepare you for your first glimpses of the country. Starting your descent over the volcanic islands of Surtsey, which emerged between 1963 and 1967, you fly low over the lava fields of what feels like a different planet - indeed, Iceland is where the Apollo astronauts practised their moonwalks.

All international flights come into Keflavik, which is 45 minutes from the capital Reykjavik. The Blue Lagoon is on the way and for ISK4,400 (£27) you can combine entry into the spa with an airport transfer. Even if a North Atlantic gale is raging, you'll be snug in the 38°C, shockingly blue water.

Accommodation in Reykjavik starts at ISK4,400 (£27) for an ensuite double at the modern youth hostel. Be warned that although Reykjavik has a population of just 150,000, hotels are often a 30-minute walk from the centre.

Something fishy
Eat out at the Askur and Potturinn & Pannan, where we were able to dine for ISK3,000 to ISK5,000 (£20 to £30) a head for two and three-course meals, including wine. The fish, served in huge portions, is particularly good value for money - not surprisingly, since it represents about 60 per cent of Iceland's exports.

On Saturday, book the Golden Circle tour for ISK8,500 (£50). You'll cross the Blue Mountains to reach the Kerid volcanic crater, now filled with water. This is where Iceland's own Bjork and Sigur Ros performed on a raft in front of an audience lining the sides.

The countryside here appears relatively normal compared to the chopped-up-tarmac look of the Blue Lagoon area, so the next two stops come as a surprise. The Gullfoss waterfalls, which narrowly escaped being turned into a hydroelectric dam (all of Iceland's electricity and heating come from renewable energy) are spectacular. Don't tell the Health & Safety inspectors, but if you trip over the ankle-high rope you're a gonner.

Even more spectacular is the Strokkur geyser, which spouts to a height of 20 metres every five to ten minutes.