First glimpsed from the approaching ferry, the Greek Isle of Hydra is a treeless, rugged outcrop of earth: a rock jutting out of the shimmering Aegean Sea. Hydra presents an austere, barely hospitable landscape where only the prickly pear appears to flourish. But Hydra's barren facade belies the haunting beauty of her harbour town: the narrow stone-paved streets, the centuries-old charm of a distinctive architectural heritage, and the proud, patriotic breed of Greeks who inhabit her shores.

Located in the Saronic Gulf just seven kilometres from the Greek mainland, Hydra is enjoying a modern day renaissance. A long era of obscurity lasting up until a few decades ago saw most of the island's original inhabitants flee to heartier prospects in Athens and beyond, but today these native Hydriots have been replaced by a new cosmopolitan community who chose Hydra over all the other islands in the Greek archipelago as the perfect setting to go about enjoying their lives to the fullest. Well travelled artists, writers and history lovers continue to be drawn to Hydra by its traditional charm and the human activity injected by the tourist trade.

The harbour town appears as a grand amphitheatre rising out of the serene, astonishingly blue waters; its buildings scaling the precipitous terrain. While the prevailing colour scheme is Aegean - white limewash and bright blue - the air is Adriatic. Square buildings, reminiscent of miniature Renaissance palazzi, are laced with arched verandahs and capped with tiled and gabled roofs. Dozens of cafes and "tavernas" lining the waterfront spill out casual clusters of tables and chairs onto the broad esplanade.

Our first hour on Hydra was an inspiring expose of everyday life. We arrived by the Flying Dolphin, a sleek and uncannily modern hydrofoil service from Piraeus. It was dusk, the day trippers had departed, and the locals had rested: the evening was about to begin. Hordes of children were playing between the string of cafes and restaurants, expensive jewellery shops, boutiques and art galleries. The flagstone quay, with its row of luxury yachts and cruisers, was an uninterrupted playground for hop-scotch, skipping and tag. Colourful round-hulled caiques and fishing boats unloaded their stores during the drawn-out twilight hours of summer.

During its heyday, this 19 kilometre-long island grew from an insignificant port in the chain of the Venetian Empire into the dominant power in the Aegean Sea. The ship-owning barons of this period two centuries past accumulated huge quantities of wealth from trading monopolies as far afield as Constantinople in the north and Alexandria in the south. Their trading voyages to Europe and the East brought Hydriots into contact with foreign fashions, ideas, architecture and decor.

Perched above the island's pristine bays, Hydra's present day mansions - known as "archontika" - were all built during a 50 year building boom led by about twenty of these wealthy ship-owning families. Their immense stone structures were inspired by the then sophisticated dimensions of late 18th century European architecture. The families imported Italian architects, French furniture, Venetian glass and English porcelain to immortalize their fortunes in bricks and mortar. In the harbour town, where most of Hydra's 3000 residents live, the architectural style is worlds apart from the low-set, flat-topped Hellenic norm. The houses resemble Venice in style.

The unusually cosmopolitan outlook adopted by early Hydriots did not die out with the island's subsequent plummet from prosperity. The new residents - many of whom are repatriated descendants of the original families - are carefully preserving the charm of the harbour town, which is now on the Council of Europe's list of protected monuments. Despite having developed into one of the Aegean's busiest tourist destinations, there are no visible compromises to the 20th century. Hydra boasts no cars, no roads - the narrow streets need only cater for pedestrians and donkeys. It is quite common to see donkeys hauling traditional building materials such as stone, slate and timber, as well as the occasional television set, to homes nestled high on the steep rock slopes.

Hydra's success in warding off the trappings of commercialism is made all the more astounding when one considers the island's intense tourist activity. Five cruise ships deliver thousands of sightseers daily during the busy summer months. Under the weight of such a pervasive annual invasion, a deterioration of age-old traditions could be expected. But, while other islands in the Greek archipelago are losing their inherent "Greekness" in the face of the escalating tourist trade, the essential character of Hydra remains in tact. The gap-toothed grins of the black-clad "Yia-Yia" - or Grandmother; the perennial clack of worry beads in the village cafes and the shrill cries of mothers calling from the hillsides at dusk for their children to come home - all are in heartening evidence on Hydra.

We spend our first night on Hydra in a renovated mansion, set high in a fold in the hillside; an exhausting, near-perpendicular climb from the water's edge. Here we met history-loving, community-conscious hotelier, Dimitris Davis, who had bought a worn-out two-century-old mansion and given it a second life - according to the strictures of traditional Hydriot architecture - as the impressive, stone Hydra Hotel.

He told us about the island's expatriate community: the photographers, musicians, composers, painters and writers who spend at least part of the year living on Hydra. Australian literary folk hero, George Johnston, and his enigmatic writer wife, Charmian Clift, are amongst the best-remembered of the island's bohemian artists-in-residence. Johnston spent a prolific decade on Hydra in the 1960s where, among other successful novels, he wrote My Brother Jack - the famous autobiographical account of his upbringing in the provincial city that was Melbourne between the wars.

On pronouncing ourselves Australians, we were often asked whether we knew the writings of our fellow-countryman and onetime Hydriot, George Johnston.

Although most of the descendants of the original ship-owning families now live and work in nearby Athens - leaving their family mansions locked up during all but the holiday season and occasional weekends, few have let them slip into decay. Most have stoically maintained the domains of their wealthy fore-fathers. In fact, until recently, many upheld the tradition of hospitality established by the ship-owning gentry of opening their doors to visitors.

Perhaps the most elegant and interesting mansion on the island is the abode of the Boudouris family. Built in 1790 on the western side of the harbour and almost leaning into the Aegean, the mansion creates an indelible first impression. Its dramatic cliff-face setting combines with the monumental proportions of the stone wall exterior and massive timber front door to evoke an almost Medieval aura. Inside are French Napolean era furniture, original decorative pieces, marble and stone floors and timber-lined ceilings.

In absolute juxtaposition to the mansion's grand facade is Daphne Boudouris, one of a handful of surviving ancestors of the once formidable clan. Dressed in jeans and an old singlet top, with bare feet and fly-away hair, Daphne greeted us warmly and led us through her home and birthplace. With her six-year-old son and her French grandmother, she spends weekends and holidays in the house and, like so many of the patriotic Hydriot descendants, she claims she "would rather die than sell".

Just a twenty-minute stroll from Hydra's harbour town, overlooking the bay of Mandraki, French painter Mariebere Lambert with her Athenian husband Argiris Markouizos, recently set up a huddle of traditionally styled villas. Though simple in layout and decor, these stone cottages possess the ancient craftsmanship and postcard setting which are the hallmarks of the genuine Greek villa. These almost brand-new buildings are entirely indistinguishable in style from their 200-year-old neighbours.

Argiris and Mariebere live a year-round holiday romance of their own. Typical of the island's native inhabitants, their lifestyle is idyllically self-sufficient: they grow their own vegetables, make their own (French style) wine, bake Greek bread the traditional way, and catch fish by dragging a net across the bay in the glow of the late afternoon.

Naturally, one of Hydra's greatest attractions is its beaches - not the familiar sweeping belts of fine sand, but usually rock platforms and ledges that slide and disappear into the crystal blue water. The sheer cliffs and ledges rising abruptly from the sea are characteristic of the Greek Islands and indeed the entire Mediterranean. Their stark, protruding appearance resulted from the birth of today's Mediterranean some 5.3 million years ago, making the Mediterranean one of the youngest of all the seas. Few areas in the world have had such a dramatic, swift and precise birth.

The dramatic birth of the Mediterranean

It is difficult to comprehend that the earth's continents are not static, but are moving around over long periods, carried by the currents circulating in the earth's immensely hot core. About 67 million years ago, Africa with Arabia still connected to it was slowly approaching Europe; millimetre by millimetre, century after century, until about 15 million years ago when Africa and Arabia collided with the European continent. The stretch of water between the heaving continents was sealed at both ends. Although every few million years or so the Atlantic spilled over the neck of land that connected Morocco and Spain, the entire Mediterranean evaporated leaving a barren salt basin.

The evaporation of course alleviated the basin of the tremendous weight of water and the earth's crust began to move again. It was not until about 5.3 million years ago that the Atlantic again flooded over the stretch of land at Gibraltar. In a mere moment of geological time, the whole basin was filled with water. For about a century, a waterfall fifty times the height of the Niagara Falls surged over the high cliffs forming the western wall of the basin until the Mediterranean was again a sea.

With the movement of the earth's crust, great slabs of the ocean floor were raised in peaks higher than the adjusting water level. These peaks, with their jagged, torn cliffs and exposed rock faces, are today's islands of the Mediterranean: powerful monoliths overlooking the calm waters.

Returning from the serenity of Hydra's shores and walking inland to the backstreets of the harbour town, the evening atmosphere of Hydra retains the inherent "Greekness" that is fading from so many other islands in the Greek archipelago. It is this special charm and peculiarities of traditions secured that attract the thousands of tourists to this tiny isle each year, setting it apart and thus preserving traditions for the future.