Where to revel in Ottoman splendour

Budget travel? Forget it - when in Istanbul, live like a sultan

Istanbul long had the reputation of being a destination for penniless travellers. In the Seventies, no self-respecting backpacker on the hippy trail to India would have failed to stop for a cheap meal at the legendary Pudding Shop on Sultanahmet Square. But Istanbul is also the city of Ottoman splendour, the ancient capital where sultans lived in such luxury that they were the envy of many European rulers. Today, despite the heavy traffic, despite the constant buzz of modern life in this city of 10 million, it is still possible to rediscover palatial life and recapture some of Istanbul's historic atmosphere. Do stop at the Pudding Shop, by all means, for decent food at a more than reasonable price; the old flea-pits still exist, mainly patronised by suitcase traders from the former Eastern block, but you should settle instead in style in one of the beautifully renovated hotels that now define the Istanbul experience.

The most unusual, and the most expensive, establishment has to be the Four Seasons Hotel. Wedged between Topkapi Palace and Haghia Sophia and beautifully combining traditional Ottoman furnishing with all the latest luxuries, it is located in a grand Ottoman building used as a prison until the Seventies. The poet Nazim Hikmet and the novelist Yashar Kemal, as well as other famous dissident intellectuals, were among the "guests". Several former inmates revisited the grounds when the hotel first opened and were startled by the spectacular change of decor.

More modestly priced, but also in the heart of the old city and leaning against the perimeter wall of Topkapi, are the Ayasofya Pensions - an entire street of small wooden houses painted in cheerful pastel colours and transformed by the Touring Club of Turkey, which pioneered the renovation of derelict Ottoman houses for the use of tourists.

Others in that style include several small Ottoman konaks renovated in recent years and offering intimacy and a glimpse of the old life. The tiny Ibrahim Pasha Hotel, with its 19 rooms, is a successful example of such conversion. The Yesil Ev Hotel also boasts an attractive shaded garden, a welcome spot to rest after an afternoon spent visiting the historic sites.

If you don't fancy being woken up by the call to prayer echoing from the mosques on Sultanahmet Square, you may prefer the banks of the Bosporus, the famous straits that separate Europe from Asia. Nestled almost underneath the majestic Bosporus suspension bridge, the Ciragan Palace Hotel, part of the Kempinsky chain, combines modern and old. The hotel section, which offers spacious rooms with a stunning view over the water, is new but the building next door was a genuine Ottoman palace before fire largely destroyed it in 1910.

When it comes to good food, you're in for a treat. Among the restaurants located in the rather garishly redone Ciragan Palace is the Tugra restaurant, which offers real Ottoman food. Turks are rightly proud of their cuisine, always cooked with the freshest ingredients and delicate olive oil. Next to the splendid basilica of Saint-Saviour-in-Chorea, Asitane, located in the Kerrie Hotel, prepares unusual Ottoman recipes adapted to modern tastes with great creativity. Over the North gate of the Spice Bazaar is Pandeli's, with its delicious speciality of fish baked in paper.

For unique atmosphere, the Sarni (Cistern) restaurant, next to the Ayasofya Pensions, is unbeatable: the food may be fairly ordinary, the service a bit sloppy at times, but, in the flickering candlelight, the deep cathedral- like Byzantine cistern, furnished with massive wooden tables and heavy wrought-iron chandeliers, provides a truly amazing setting.

Sultans used to be taken across the Bosporus in caiques, the long narrow rowing boats that can still be seen in the naval museum. You can - almost - replicate the experience by taking the small boat that ferries diners across the straits for a meal at Kirfez. This upmarket fish restaurant is justly famous for its sea-bass cooked in salt, and the romantic journey at night across the dark water only adds to the attraction. Closer to hand is Liman restaurant, which offers white-tie service overlooking a busy quayside about 200 yards north of the Galata Bridge over the Golden Horn.

If you have exhausted the pleasures of the covered bazaar, haggled over a carpet or two, and want to take home a reminder of your Ottoman experience, you could explore the narrow alleys of Cukurcuma, near Taksim square. Until recently a rather run-down area of town, Cukurcuma has been taken over by antique dealers. Shop after shop offers Ottoman relics, Anatolian carved doors, rich brocades, old clothes and paintings, all at prices that are inflating rapidly to match a growing interest in the Turkish past. But an afternoon spent sifting through dusty storerooms and dark corners filled with antiques could yield the treasured piece that will be a lasting reminder of old Istanbul.

Istanbul's five-star hotels usually quote prices excluding breakfast and the 15 per cent tax you'll need to pay. At the Four Seasons (tel: 00 90 1 638 8200; fax: 00 90 1 638 8210), prices range from $270 (about pounds 168) for a standard double room, to $850 (pounds 525) for a de luxe suite. At the Ciragan Palace Kempinsky (tel: 00 90 1 258 3377; fax: 00 90 1 259 6686) splendid seaside rooms start at $280 (pounds 173) for two, while the rooms with park view are $210 (pounds 130).

In a more modest category, prices start at $100 (pounds 62) for a double room at the back at the Ayasofya Pensions (tel: 00 90 1 513 3660; fax: 00 90 1 513 3669). The nicer front rooms cost $120 (pounds 74), while the suite is $200 (pounds 123). These prices include tax and breakfast.

At the Yesil Ev (tel: 00 90 1 517 6785; fax: 00 90 1 517 6780) a double room, including breakfast and tax, is $150 (pounds 93) while the Pasha Suite can be hired for $240 (pounds 148). The Ibrahim Pasha (tel: 00 90 1 518 0394; fax: 00 90 1 518 4457) offers double rooms for $95 (pounds 59), including tax and breakfast. A suite there will cost you $135 (pounds 83).