Byron Bay's poetic beauty

Odds are that Coldplay singer Chris Martin is not looking forward to his return visit to Byron Bay next week. The usually mild man of rock is due in court there for allegedly attacking the car of a photographer who snapped him surfing at a beach earlier this year. You can't blame Martin for being a little peeved. Byron Bay, a laidback surfer town right at the tip of New South Wales, just before it segues into Queensland, is the kind of place where anyone - even an international rock star - would expect to be left alone. Its unfeasibly beautiful setting, subtropical climate and proliferation of excellent beaches have attracted an arty, alternative crowd who live a pretty much idyllic existence.

Martin and his girlfriend, Gwyneth Paltrow, had checked into Rae's, an Art Deco-meets-Moroccan hotel overlooking Wategos beach. Its seven suites (there are no plain rooms) are a private haven for the super-famous: Tom and Nicole; Nicole, Ewan McGregor and Baz Luhrmann; Russell Crowe and Meg Ryan; Russell and his new wife ... The week before I was there, Keith Richards and his family were staying, and owner Vincent Rae, a fortysomething surfer dude, says anyone making a film in Sydney "pops up for a few days". Since that includes an awful lot of Hollywood blockbusters - from The Matrix films to the Leonardo DiCaprio version of Alexander the Great - you can imagine the roll call of stars floating around. This being Byron Bay, though, nobody bats a chilled-out eyelid.

I first visited Byron five years ago as a wannabe surfer chick. It was full of backpackers, hippies and surfers, with an atmosphere enjoyed only among those unencumbered by nine-to-five employment. This time around, the driver who picks me up at tiny Ballina airport after a short flight from Sydney says: "Byron used to be full of druggies. Now it's yuppies and druggies." A great fanfare has been made about seeing off corporations like McDonald's and Club Med (there are no chains, only homegrown businesses). Yet it seems the locals have been unable to hold back an invasion of a different kind.

The atmosphere is still so laid-back it is almost horizontal, but now fashionable weekenders from Sydney and Brisbane mingle with residents. Women with toned bodies, wearing stylish, no-logo sportswear, walk labradors and poodles along the beach. At least they have tans suggestive of a sporty, outdoors life, as opposed to the You've Been Tangoed look beloved of American and British celebrities.

And while Rae's used to be a style oasis in the midst of countless backpacker hostels, now there are boards all over town for luxury-apartment and villa rentals. The owners of the self-catering Byron Blisshouse - a flip-flop's throw from Belongil beach - have refurbished the penthouse flat on a luxurious scale and are opening an even more up-market property, the Blisshouse Massinger, in the centre of town.

Around Jonson and Lawson streets, the town's hub, new bars and restaurants are cropping up among the art galleries and alternative-health shops. "It's definitely changing," says the bartender at Dish, one of the hippest restaurants. "You still get the alternative feel, but instead of just the combi vans you get the BMWs too."

High-spending newcomers have aided Byron Bay's culinary improvement: Dish's Asian Pacific fusion menu, and the best chocolate ice cream I have tasted, come courtesy of chef Tippy Heng, who trained at Rockpool in Sydney. Similarly sophisticated cooks can be found elsewhere: Neale White, at the recently opened Olivio Eatery, worked at Gordon Ramsay's Aubergine (hence the European menu), and Steve Snow, owner/chef of Asian seafood restaurant Fins, is formerly of Chez Gourmet in the monied Sydney suburb of Rose Bay.

A stroll among the boutiques reveals that fashion has moved on from surfwear and hippy fringed skirts (although you can still get those). Tupelo sells highend Australian designers such as Lisa Ho, while Swoon and Hunter deal in younger Oz brands, among them Grab, Cooper Street and Bracewell. One well-groomed American woman staying at Rae's was impressed to find a label she had not been able to track down in Los Angeles.

On the morning I'm due to leave I take one last walk along the beach. It is lined with heartbreakingly gorgeous beach houses - all subtropical landscaped gardens and wooden staircases leading down to the sand. But in the car park is a camper van spray-painted with the words: "A week not spent wasted is a week wasted." Good to see that some things in Byron Bay never change.

Way to go

Gillian Rhys travelled to Byron Bay with Travelmood (Tel: 08700 664 556, www.travelmood.com); a 10-night package (five nights room only at the Shangri-La in Sydney, five at Peppers Casuarina, Byron Bay) costs £1,535 per person, including flights, in December and January (not Christmas). Further information: Tourism New South Wales (Tel: 0906 8633 235, www.sydneyaustralia.com).