Old photographs, visible in some of the fascinating local museums, attest to the scope and success of the repair job. Almost completely destroyed by a massive flood in 1964, now the roofs have been fixed, the side streets cleared of rubble and rubbish and the riverside area converted from a dismal dock to a delightful promenade of balconied restaurants and shops.

Now quite a few of the protected houses have been converted into guest houses. We looked in a few and had a great mini-tour of some beautiful timbered properties, full of dark wood, intriguing doorways and sun-splashed courtyards. Whilst they were undeniably romantic, the lack of facilities, and hot water, was a good reason to stay in our comfortable hotel room with en-suite bathrooms. There are a number of hotels in the old town, but you can also easily get to Hoi An from nearby beach resorts.

Hoi An isn't just a pretty picture; it's rapidly turning into a shopper's paradise. Wandering through the old town, you can find everything from hand-woven shawls to delicately glazed ceramic tea sets, plus the trademark Vietnamese dress, the Ao Dai (pronounced "ow zai"). The town is also attracting artists from as far away as Saigon and Hanoi - one distinguished painter had sold his shop in Hanoi and set up here because the rent was cheaper and the atmosphere more conducive to creativity.

Vietnamese art is a unique blend of traditional subjects (still life, portraits, landscapes) and techniques (particularly the use of lacquering and gold leaf) with modern styles. Everything from Chinese calligraphy to cubism can be found along the leafy streets leading up to the town's symbol; the Japanese covered bridge.

One thing that tempts many tourists is the abundance of tailors in this town. From an array of beautiful materials the tailors will create or copy anything you desire; and with shirts costing as little as $5, the wardrobe of your dreams is achievable. The local speciality, however, is Chinese lanterns. These are made from a wood or bamboo frame carefully wrapped in ultra-fine silk or muslin in a startling array of colours and sizes. And to show off these local treats in all their glory, the local tourist board has started a monthly event called "Hoi An Legendary Nights."

Held each full moon, the "legendary night" sees the bustling evening streets transformed into a romantic's haven. Motor vehicles are kept at bay, electricity outlawed, and one is transported into the past. On our visit, previously hidden gems became illuminated by the red, orange, blue and white lamps which lit our way as we rambled aimlessly around the old town. Following the sound of a Vietnamese violin we came to the waterfront, where local musicians serenaded passers by. We paused for a glass of beer outside one popular restaurant and listened to a flautist play eerie hill tribe refrains and Mozart. On our way home, the sound of girls and boys singing traditional courtship songs to each other from candle-lit boats wafted on the breeze over the darkened Thu Bon River.

During our week in the city we were also lucky enough to witness two other festivals: the Hoi An – My Son festival which celebrated 5 years of UNESCO recognition, featuring traditional dancing and a river borne parade of gaily lit boats and also the 2nd Japanese–Vietnamese cultural exchange where we jostled with children to make origami flowers and witnessed one of the most surreal experiences of our travels – Japanese ladies line-dancing in kimonos!

Still not convinced that this is travel heaven? The food here is marvellous. Local specialities include Cau Lau, a noodle concoction made only with water from a particular well, which serves as a great appetizer for the many varieties of seafood available. Those who appreciate the wonderful gastronomy of Vietnam can avail themselves of one of the many half- and one-day cookery courses available. The riverside also boasts excellent Western cuisine – the Cargo Club has fantastic croissants and cakes.

As a further bonus, Hoi An is also a 5 minute cab ride from a pristine white beach and turquoise sea, where we lazed in hammocks for a couple of afternoons, virtually the only foreigners on a mile of coastline. It's also about 45 minutes away from the ruins of My Son, one of the most revered Cham-era temple complexes in the country, dating from the 4th to the 12th century, and well worth a day trip.

There's still plenty more to do for those with time to spare. Hoi An makes a great base from which to explore Central Vietnam, with the beaches and city of Danang and the imperial city of Hue all within easy reach. It couldn't be easier to get there either, with regular flights from Ho Chi Minh City, Hanoi and international cities to Danang airport 30 kilometres away.

The winding streets of this delightful town are bursting with colour, and although I could appreciate that the character of the place has been changed significantly since 1999, there is much of the old town atmosphere left to savour. Most tourists only spend a day or so here, which is adequate to get the gist of the place, and to see the few old houses, temples and museums included in the four dollar multiple-entrance tickets (valid over three days). Visitors looking for a taste of the old Vietnam should discover Hoi An; all the flavours, sounds and colours of this unique country are just an alleyway away.