CYPRUS is riding the roller- coaster of package holiday popularity: up on a high last year, down on a low this summer. After a year of plenty, hoteliers were tempted to push up prices; unfortunately, they pushed them up too quickly - some operators increased prices by as much as 12 per cent.

Britain's sudden exit from the exchange rate mechanism was a deadly blow for the Cypriot tourist industry: this time last year there were CY pounds 0.82 to the pound. After Black Wednesday the rate slumped to CY pounds 0.69 but has now recovered to CY pounds 0.74: better value but nevertheless making the island a relatively expensive destination.

As a result of this unhappy combination of events, bookings have slumped. At Christmas, sales of holidays to Cyprus were down by 50 per cent on the previous year; things have improved - the deficit is now around 30 per cent - but there are plenty of unsold holidays on travel agents' shelves, although there is no sign yet of cut-to-the- bone prices. You will be lucky to pick up a seat-only deal to Paphos for less than pounds 150 (twice what you would expect to pay for a cheapie to Palma or Malaga). The higher prices, however, mean a better sort of clientele - none of your 'ere-we-go mob clogging up the beachfront.

Paphos is worth paying the extra for. The old town and harbour are agreeable places with attractive waterside cafes and pleasant shops. On the debit side, the new part of the town to the east, with its strip of modern beachfront hotels, would give the Prince of Wales the screaming habdabs. But it is hard to dislike Paphos. While places like Benidorm have a surfeit of budget accommodation, Paphos is overloaded with four- and five-star hotels. If the place is grotty, then it's a sort of up-market grottiness.

You will not have to walk far from your hotel to discover one of Cyprus's richest treasures: the mosaics at Paphos, which were discovered by a workman's bulldozer in 1962. The images and colours are breathtaking. Nearby are the Tombs of the Kings, which date back to 300BC. A short drive from Paphos is the Roman theatre at Curium and the Sanctuary of Apollo near Episkopi (who can forget Episkopi, a name redolent of the smell of Sunday lunch and the sound of Two-Way Family Favourites . . .).

Paphos's greatest attraction, however, is its proximity to the Akamas Peninsula, an unspoilt area to the north (described as the 'last truly Homeric landscape in the Hellenistic world').

The best known feature of the Akamas is the famous turtle beach at Lara - but inland there are dozens of (so far) attractive towns and villages such as Polis, Droushia and Kathikas.

And if you tire of mosaics and turtles, go car spotting. Peer into ancient village sheds and you discover old Austins and other famous British marques: in Cyprus's rust-free climate they are in much the same condition as they were after their last outing. Truly a holiday that has everything. . . .

Getting there: Cyprus Airways (071-388 5411) operates scheduled flights to Paphos from Heathrow on Mondays and Tuesdays, and from Gatwick on Tuesdays and Wednesdays. Return fares start at pounds 233 for a PEX deal, which must be booked and paid for at the same time, and must include a Saturday night stay.

The Cypriot government has theoretically prohibited people from arriving on seat-only charter tickets: in practice, they would rather have somebody than nobody - so the charter cheapie business remains intact.

Owners Abroad (061-745 7000) is currently offering return charter flights to Paphos from pounds 189: expect to pay up to pounds 250 during July and August. Other charter operators worth contacting include Avro (061- 489 2989); Falcon (061-745 7000); and Unijet (0444 458181).

Car hire: If you want to explore, a hired car is indispensable. Expect to pay around pounds 60 for three days' ( pounds 135 for seven days') hire of the smallest car including unlimited mileage and all extras.

Accommodation: Paphos has a choice of more than two dozen hotels and apartment blocks, where finding a room is unlikely to be a problem even during the peak season. Accommodation at the Violetta Apartments costs from around pounds 10 per person per night; a room at the up-market Cypria Maris hotel costs from pounds 50 per person per night including bed and breakfast. For a more environment-friendly trip, Sunvil Holidays (081-568 4499) offers 14-night fly-drive packages with accommodation at traditional village houses for pounds 457 per person including return flights and car hire.

Books: Published this month is the new Cyprus: The Rough Guide (Penguin, pounds 8.99), written by Marc Dubin, which offers reliable advice and solid information. It covers the whole of Cyprus - north and south. Also worth packing is Landscapes of Cyprus (Sunflower, pounds 8.99) with good suggestions for car tours, walks of all grades and scenic spots that are ideal for picnics.

Further information: Cyprus Tourism Organisation, 213 Regent Street, London W1R 8DA (071-734 9822).

(Photograph omitted)