To our left were three steaming Jacuzzi-like "hot pots" of varying temperatures. After a few minutes broiling in the hottest of these we were happy to join the poolside strollers and cool our tingling skins beneath the stars. It seemed a strange way to spend our first evening in Iceland, but then this is a strange country, where puffin features on the menu, the nights can be lovely and sunny and besuited businessmen will tell you, in all seriousness, that they believe in fairies and elves.
The following morning we began to understand why Iceland had inspired Jules Verne to write Journey to the Centre of the Earth. As we made our way south along the coastal road towards Keflavik, we drove through vast, barren lavafields, where black spiky boulders poked through their draping of thick snow. Little wonder that Neil Armstrong and his team practised their lunar landings in Iceland, and that the steam-spouting landscape often featured in Star Trek. On the horizon, a huge column of smoke, which turned out to be steam, indicated our destination, the Blue Lagoon. The romantically named lagoon is in fact a small lake of briny effluent from a hydroelectric power station. Its sulphurous, silica-rich water was discovered to be a curative, and Icelanders regularly drive out from the capital to soak in its turquoise depths. The water was almost unbearably warm, the steam so thick that other bathers were only intermittently visible. From time to time the billowing clouds would part to reveal the Ghormengastian machinery of the plant.
Strange experiences of this kind are quite commonplace in Iceland where the earth spews scalding water, where boiling mud bubbles in craters and where the land is being pulled apart, an inch every year, by the competition between continental plates. The country's shifting glaciers and flaming volcanic fissures render 80 per cent of it uninhabitable and the island of Surtsey exploded out of the sea barely 30 years ago.
Iceland is, as Auden jokily said after he visited it in 1936, a "nice land", but it is also an eccentric one, an appropriate venue for a Cold War summit perhaps, but a winter holiday? Well, yes. For although much of the interior is frozen, many of the main roads remain accessible. The Golden Circle tour from Rekjavik, for example, which takes in the Gulfoss Waterfall and Geysir (the source, as became evident, of our word "geyser"), goes on throughout the winter; the only difference is that the waterfall is half frozen, its sides draped in thick folds of greenish ice. From the observation platform we could see chunks the size of cars splitting off and falling into the foam below. A few miles on, the geysers at Geysir continued to bubble and boil despite the sub-zero temperatures. We giggled apprehensively as the largest, Strukkur, gurgled in its crater and slopped ominously from side to side; then with a dull, thudding noise it rushed to the surface in a balloon-like blue bubble and shot a shaft of boiling water 70 feet into the air.
Reminders of the country's tremendous geothermal power are everywhere; from the name of the capital's main drag - Laugavegur or "Hot Spring Street" - to the sulphurous steam that rises from the drain covers and melts the snow on the pavements. Rekjavik itself means "smoky bay", a reference to the plumes of steam the first Viking settlers encountered when they arrived 1,000 years ago. Today, Rekjavik is a neat city of prefabricated- looking houses with roofs in jolly colours that lend it a Toytownish air. Things are prodigiously expensive - a paperback costs pounds 12 - and the shops display a bizarre selection of goods; circular saws, thermal underwear and Christian Lacroix dresses can all be purchased within a few yards of each other. The restaurants are good though they feature some pretty odd fare - I developed a taste for cormorant and reindeer carpaccio. Even stranger is the Icelandic obsession with news and culture. In an island of only 250,000 people, there are five daily newspapers, eight theatres, an opera house, a concert hall and two art galleries, all fully subscribed. Moreover, Icelanders both publish and read more books per capita than any other nation in the world. Maybe it has something to do with the two impenetrably dark winter months.
By far the best winter weather is in the north-east of the country and so we flew across the white, crater-pitted interior, over shining glaciers to the northern capital, Akureyri. From here we drove to Husavik, a coast- hugging trip around a deep fjord where icy mountains sloped down to a steely sea. For the past couple of years Husavik, a tiny fishing village of 500 people, has been attracting tourists who come to watch whales in summer, and take part in winter sports from November to April. "The snow often lasts until May," our guide, Hordur Hemannson of Highland Expedition Tours, told us.
Early next morning a white Land Cruiser with tyres like a combine harvester drew up outside our hotel. Inside, it had three gear boxes, 15 gears, and an on-board computer. On its roof were four radio aerials. For the next six hours we bounced across the rock-strewn lava using the Global Positioning System to chart our progress by satellite across a pre-programmed track. Every now and then the wheels would spin wildly in the waist-deep snow, the computer beeping its approval as Hordur guided us round each rock. At lunchtime we had a tailgate picnic, attached crampons to our boots and climbed down to see Dettifoss, at 44 metres Europe's most powerful waterfall and normally inacessible in winter.
The next day we donned snowsuits and crash helmets and mounted Skidoos, snow-scooters on caterpillar tracks. These are surprisingly easy to master: just press the accelerator and go. We felt like Formula One racing drivers as we sped over the virgin landscape in bright sun and brain-rinsing cold. It was tempting to carve our initials into the landscape, but our guide advised us against it - deep volcanic cracks lurk beneath the apparently solid white surface. Iceland bestrides the faultline between the American and Eurasion tectonic plates. Every time they crash together a new crack opens up, vomiting magma from its depths.
That night we were taken down into one such crack, formed 15 years ago. We slithered 20 feet into a snow-filled, candle-lit cave. Clusters of icicles hung from the roof, the floor was a frozen lake. There we played football on the ice with a stone and ate Icelandic specialities: "foods a man remembers till he dies" according to Auden - rams' testicles in whey, singed sheep's head pate, smoked lamb, and harkarl, or rotting shark's meat. Harkarl is frankly disgusting. It is buried in sand for anything between six months and 13 years and, it is said, the putrefaction process is assisted by a liberal sprinkling of human urine. I anaesthetised my mouth with a big slurp of the local "Black Death" schnapps, then swallowed it like a pill. My companion, politer than me, chewed his thoughtfully. "The ultimate sushi," he said. He then attempted to light a cigarette in the flame of a candle. "Don't do that,'' said Hordur, striking a match for him instead. "Icelanders believe that every time fire is taken from a candle, somewhere a sailor drowns." Icelanders seem to take their folk lore seriously: we heard many stories of new roads being diverted around rocks in order not to disturb the elves.
There are hardly any trees in Iceland, apart from a few scrubby little birches and some imported firs in the capital. Animal life is also sparse; you might see the odd raven and, if you're really lucky, catch a glimpse of an arctic fox; but there is not much in the way of four legs apart from the sturdy little Icelandic horses and sheep. Occasionally, polar bears float down from Greenland on an ice floe but are guaranteed a frosty welcome when they arrive. The last one to visit Iceland was greeted with a bullet in the head, and is now an exhibit in the small museum in Husavik.
Everyone had told us that Friday night in Reykjavik is a wild sight - and it's true. The world's most northerly capital deserves its reputation as a place to get wrecked despite the exorbitant price of booze. Most Iceland-ers cope with the expense by holding down two jobs, then at the weekend cafes and bars are crowded with tall young men and women getting legless. Chucking-out time is at 3am, when the neat squares throng with inebriated teenagers singing lustily.
"I think we have a tendency to excess here," said one young man over a glass of beer the night before we left. "This is not a country of half measures. It is either dark or it's light; we have an earthquake somewhere almost every day. It's bound to affect us in some way.
"Are you going to come again?" he enquired as we parted company just after midnight. I replied that I certainly would. After all, who'd want to be called "heinskur"?: the Icelandic word for stupid means literally "he who stays at home". !
WHEN TO GO: The winter lasts from November until late April. Avoid December and January because of the extremely limited daylight; from mid- February Iceland gets a reasonable amount - 6 to 7 hours a day.
GETTING THERE: Icelandair, 172 Tottenham Court Road, London WI (0171 388 5599). There are daily flights from Heathrow and twice a week from Glasgow. Flying time is three hours. Fares start at pounds 306 return.
TOUR OPERATORS: Arctic Experience (01737 218800) run individual and group tours to Iceland at all times of year. Highland Expedition Tours can be contacted at Hotel Husavik (00 354 464 2161).
FURTHER READING: The Lonely Planet guide combines Iceland, Greenland and the Faroes and costs pounds 10.95.