Every morning as I pass the cheery Spanish Churreria Espanola close to my home, I am hit by the scent of bacon and eggs. But even after 35 years of serving English breakfasts, Senor Antonio, born many years ago in a small town 20km from Granada, feels as proud as ever of his Spanish heritage. "Ah, Granada," he sighs. "It is something else!"

Several months later on a cool night in Granada, as I gaze at the sun-dried tapia exterior of the majestic Alhambra, I remember Antonio's words. Nestled at the foot of the Sierra Nevada, yet 740 metres above sea level, Granada has been wrangled over by successive races and religions. The capital of the autonomous region of Andalusia is indeed the jewel of the Iberian peninsula.

The first thing that strikes you is the openness of the people here and their keenness to help, even befriend you, after knowing you for all of two minutes. Yes, there has been steady modernisation of some of the traditional backstreet hangouts of the city, and yes, the gypsies of Sacromonte have now cottoned on that they can charge you a fortune to watch them perform the fiery flamenco that runs in their blood. Yet despite these nods towards tourism, the town beats to the sound of its own rhythm, a mix of peacefulness, exuberance and sensuality.

Nowhere is this more apparent than in the Moorish Albaicin district, named as a World Heritage Site in the Eighties, which juxtaposes defiantly with Christian Granada. The sound of scooters and drilling ("for dinosaur remains", according to Fabiola, our hostess) revives the otherwise slumberous ascent to the Mirador St Nicholas.

You can sit here for hours drinking in the panoramic view of the Alhambra, often to the accompaniment of a guitar and the occasional budding entrepreneur attempting to sell you wares of dubious legality.

From there we walk towards Calle Calderiera, past white buildings with contrasting wooden doors inscribed with arabesques, and teterias - Moorish tearooms, where mint tea is served within shaded verandas. Bells jingle and shishas jangle in the bazaar - and despite my better intentions, I emerge clasping an Arabian coin-adorned shawl.

Strolling back down Calle Elvira, I stop to sip a red mosto (grape juice) in La Antigualla, a Middle Ages-inspired bar with walls bedecked in suits of armour, which serves sizeable if weird tapas of chips, bagels and hamburgers. These bars are unmissable; there is a Europa Bar, a Moroccan one called Om Kalthum and even a Brazilian place nearby. In Granada the tapas come free with the drinks and with the drinks being as cheap as 1.50 euros, an afternoon siesta can be lengthy.

Before dinner I go hunting for the Banos Arabos in Santa Ana. A short walk from Plaza Nueva, these baths are a soothing escape from the city. From only 12 euros for the use of the baths or a massage, they won't break the bank either.

The next day, we take a mini tourist bus to the gates of the Alhambra. Be warned: once inside, you may not want to leave. The citadel is breathtaking, from its famous Lion Courtyard (which inspired Washington Irving to pen his famous Tales of the Alhambra) to the Court of the Blessing with its rippled pool, reflecting the intricate Qu'ranic verse embedded in the surrounding arches. Vandalism, years of neglect, an earthquake, ill-judged restoration by successive Spanish kings after Granada's fall in 1492 and even an attempt by Napoleon to blow it up have all failed to mar its beauty. Its splendour partly derives from its strategic position high in the mountains. Fabiola recounts incredible tales of her childhood, when she and her cousins would slip through unnoticed to enjoy the free run of Queen Isabella of Spain's own state apartments, now off-limits to the public.

Outside, the sound of nightingales apparently still emanates from the Generalife gardens, interspersed with the gurgling of then-revolutionary man-made water features. Straining, all we hear are loud, mostly American, voices. There is no quiet period to visit, but perhaps the best time is near the end of September, close to sunset, when the weather is still warm enough but the tourists are slowly trickling out of the city. If you cannot bear to leave the Alhambra at all, you can find the Parador San Francisco, a converted monastery with rooms for reservation, in the grounds.

In a week I take two more trips to the Alhambra. I marvel at the gaudy interior of the Capilla Real, housing the mausoleum of King Ferdinand and Queen Isabella, and witnessed the spectacularly ornate vestry of the Cartuja Monastery. I photograph countless secluded courtyards with gurgling fountains, the impressive university faculty and the Hospital Real. My only complaint? That the Gladiator-style bull-fighting arena is closed for refurbishment.

You really must burn the candle at both ends to get a feel for the real Granada. One night, after demolishing one of Fabiola's sister's mouth-watering seafood paellas, I hit the town. Chilling out first at the mellow Jazz Caf Bohemia, I then make for the funky Granada 10 - cinema by day, disco by night. For a different atmosphere, try a flamenco dinner show, a dance lesson at the more serious flamenco establishments dotting the Camino del Sacromonte or the surreal experience of clubbing in the caves of Sacromonte. If you really crave the Neanderthal experience, check in to a Sacromonte cave hotel.

Outside again, the words of Mexican poet Francisco de Icaza - spoken to a woman reluctant to help out a poor blind man - come to mind. "Give him some money, woman, because there is nothing like the pity of being blind in Granada."