The Madeirans love to push the boat out at Christmas and New Year, making this an excellent time to visit. The island's capital, Funchal, boasts thrillingly 3D festive illuminations – waterfalls of fairy lights, hosts of angels and giant walk-through baubles – that put London's Christmas bling to shame. The fireworks which explode over the city at midnight on New Year's Eve are every bit as spectacular as Sydney's, without the crush.
For a dose of pre-Christmas magic, feast your eyes on ecclesiastical art at the Museu de Arte Sacra in Funchal, or pause to listen to choirs and folk bands in the mosaic-cobbled squares. Visit Madeira's churches and as well as glorious tiles and gilding, you'll find elaborate presepios (Nativity scenes) to admire.
Take the cable car up to the lofty hillside chapel of Nossa Senhora do Monte; you can then ride back down by traditional carro, a road-going wicker sleigh steered by burly drivers. It's a diverting form of transport at any time of year, but even more so if you and your companions are decked out in Santa hats.
"Few visit Madeira who do not take that delightful ride up the mountain on horseback, and experience the delirium of the coast down, over the polished stones, in a wicker sled" – Mr Keegan's Elopement (1896) by American novelist Winston Churchill (no relation to the British statesman, who shared his fondness for the island).
"It always feels good to support my homeland" – twitter.com/Cristiano. Real Madrid footballer Cristiano Ronaldo, on starring in a Visit Madeira advertising campaign. The man in the number-seven shirt grew up in the parish of Santo Antonio, Funchal, and still visits fairly regularly; there's a CR7 boutique selling his flashy own-brand fashions on Rua Vale da Ajuda on the west side of town.
The range of non-stop flights from Britain to the island's spectacular airport has never been wider. Thomson Airways (0871 231 4787; flights.thomson.co.uk) flies from Birmingham, East Midlands, Exeter, Gatwick, Glasgow, Manchester and Luton. A one-week return flight from Manchester on 24 December is £99, from Gatwick £159. Or fly on easyJet (0905 821 0905; www.easyjet.com) from Gatwick, Stansted and Bristol , TAP Portugal (0845 601 0932; www.flytap.com) from Gatwick, and Jet2 (0871 226 1737; www.jet2.com) from Manchester.
A warmer winter
Madeiran winters are usually very pleasant: in December and January, Funchal enjoys five times as much sunshine hours than London. Daytime temperatures hover just under 20C: mild enough to swim in the sea or a heated outdoor pool, though there's always the possibility of rain. Indeed, Madeira took a serious knock on 20 February this year when flash floods and mudslides caused by freak weather conditions tore through parts of Funchal and several rural valleys, killing 42 people and destroying homes, roads and bridges. However, after a highly efficient clean-up operation, the Madeiran tourist authority (00 351 291 211 900; www.madeiraislands.travel) was quick to declare the island "beautiful as ever".
Funchal is a small, charming and unmistakably Portuguese city, its façades adorned with ornate balconies and its pavements beautifully patterned with chunks of black lava. In the 16th to 19th centuries, the settlers made enough money from sugar cane and wine-making to stuff their churches and mansions with treasures; several are now museums. In recent years, smart new places to stay have popped up, prompting talk of the city developing a hip, edgy image, with The Vine on Rua dos Aranhas (00 351 291 009 000; www.hotelthevine.com), a swanky boutique hotel over a swish shopping mall, leading the way. But in reality, it's the city's doggedly old-fashioned flavour that remains its most appealing feature.
To the manor born
For vintage elegance in one of Funchal's quieter quarters, book a stay in a manor house hotel, or quinta. Atlantic Holidays (01452 381888; atlanticholidays.net) offers seven nights at Quintinha de Sao Joao (00 351 291 740 920; www.quintinhasaojoao.com), a relaxed five-star hotel with a leafy garden on Rua da Levada de Sao Joao, just northwest of the city centre, from £899 per person including flights from Gatwick on 20 December. (The price falls to £599 for January departures.). For £100 more you could opt for the more formal surroundings of Quinta da Bela Vista on Caminho Avisto Navios, on a hill to the west of town (00 351 291 706 400; www.belavistamadeira.com).
For something more central with sparkling Atlantic views, the classic choice is Reid's Palace Hotel (00 351 291 717 171; www.reidspalace.com), which has double rooms from €221 (£188) including breakfast. Past guests include George Bernard Shaw, who was inspired to take tango lessons in the garden during his stay in 1924, and Sir Winston Churchill, who holidayed here aged 75. In 2011, Reid's will be celebrating its 120th year with concerts and parties.
Madeira's top restaurant, Il Gallo d'Oro at the Cliff Bay Hotel on Estrada Monumental (00 351 291 707 700; www.portobay.com), has won a Michelin star three years in a row for its sophisticated Mediterranean-style cuisine. However, the island is best known for peasant fare such as grilled fish, laurel-scented kebabs and, at Christmas, carne de vinho e alhos (pork with garlic and wine). For goodies such as bolo de mel (tasty, chewy gingerbread) and home-made liqueurs, head for the Noite de Mercado, Funchal's one-off Christmas market, held in the Old Town on 23 December.
Madeira wine is definitely not for fuddy-duddies: hipsters drink it on ice, while 10-year-old Sercial (the driest variety) goes like a dream with sushi. To sample a few vintages, take a tour of the Old Blandy Wine Lodge (00 351 291 740 100; www.blandys.com) on Avenida Arriaga, Funchal. This museum and tasting room is stuffed with wine-making paraphernalia and infused with intoxicating aromas.
Where's the beach?
Some claim, unfairly, that Madeira has no sandy beaches – in fact, there are three, one natural and two man-made, at Canical and Machico on the east coast and Calheta in the south-west. However, for a long, lovely stretch of sink-your-toes-into-it sand that's great for strolling, even if it's not sunbathing weather, you'll want to hop across to Madeira's little sister, the island of Porto Santo. It's a 20-minute flight away with Sata (00 351 296 209 720; www.sata.pt) or a little over two hours by ferry with Porto Santo Line (00 351 291 210 300; www.portosantoline.pt). Porto Santo is a quiet island with a handful of low-key delis, restaurants and hotels.
Most nature-loving visitors to Madeira head for higher terrain. Carved by the elements into steep crags, Madeira's interior would be daunting to explore on foot were it not for the levada trails, which follow narrow water channels through the mountains, allowing you to enjoy the magnificent scenery with minimal climbing. Nature Meetings (00 351 291 524 482; www.walkingmadeira.com) organises excellent guided hikes and can advise on the best places to go in winter, when some trails may be closed for repair or obscured by fog.
What Google will tell you
"The record for the largest firework display consisted of 66,326 fireworks and was achieved by Macedo's Pirotecnia Lda in Funchal, Madeira, Portugal, on 31 December 2006" – from www.guinnessworldrecords.com.
What Google won't tell you – until now
You don't need to count every rocket to know that Funchal does pyrotechnics very, very well. Several hotels claim to offer the best view of the new year spectacular, but thanks to the city's amphitheatre-like topography, almost anywhere will do. Best of all, grab a place in a boat out in the bay: several local cruise companies, including birding and dolphin-watching experts Madeira Wind Birds (00 351 917 777 441; www.madeirawindbirds.com), are offering the chance to make a night of it.