Reykjavik's location, set on the fringe of the Atlantic Ocean and surrounded by a lunar volcanic netherworld, with the shadowy hulk of Mount Esja in the background, is both romantic and beguiling. Legend has it that the world's most northerly capital was founded by a Viking called Ingólfur Arnarson, who named the place Reykjavik (Smokey Bay) after the steam rising from the hot springs.

Today, these numerous geothermal springs provide almost all the heating and water in the city, and the low level of fuel emissions gives the city clean air and crystal clear skies - when it is not raining.

The lack of pollution is also due to the comparatively small size of the capital. From only a handful of farmhouses until the middle of the 18th century, when a small trading community began to grow, Reykjavik gradually developed as an urban centre. By the end of WW2, Iceland gained full autonomy from Denmark and Reykjavik became Iceland's capital city.

Although it still feels like a provincial town, with its low buildings and brightly painted houses, Greater Reykjavik is home to three out of five Icelanders and the diminutive city dominates Iceland politically, socially, economically and culturally. 

And since Reagan and Gorbachev played out the end game of the Cold War in Reykjavik in 1986, the city has emerged as an unlikely tourist destination.

Countless travel articles are published focusing on its nefarious nightlife and thousands of tourists a year fly to the city to seek out the legendary bars and clubs. Considering that beer prohibition only ended in 1989, this is particularly impressive but the locals seem to have made up for lost time and the scene in the city centre at weekends is one of hedonistic mayhem.

During the day, Reykjavik is a far more sedate place with trim houses, rubbish-free streets and an easygoing pace of life. There are bountiful cultural attractions, countless cafes, six geothermal swimming baths and a myriad of day trip opportunities into the stunning hinterland. Cultural festivals are also currently multiplying and maturing, as Iceland begins to establish its cultural identity.

Situated in the country's southwest corner, on Faxaflói Bay, the city has a very wet climate with winds and rain blowing in from the sea. However, the Gulf Stream prevents the city from becoming as cold as its northerly location might suggest. Still, winters are long and bleak, with just four hours of daylight on some days, although the chance to view the spectacular Northern Lights makes up for this. Summer, by contrast, brings the famed midnight sun with the city's inhabitants at their most colourful and the streets taking on a much lighter atmosphere at night.