Here's the astonishing thing: in Bali even the scruffiest motorbike can be made sacred by hanging religious objects from the handlebars; a car dashboard can become a shrine; and an open drawer in a clothes shop turned into an altar, complete with an offering of food and flowers on a palm-leaf plate.

I have been nowhere else where Hindu shrines in the smartest internationally owned hotels are tended by staff, lighting incense and mouthing ritual prayers. I was prepared to be sceptical about claims that Bali is a special spiritual place. But I left this greenest of islands a convert – and like all born-again zealots, I need to spread the word.

Bali needs its tourists. Wherever we went, in the south and the east of the island, we were painfully aware of how desperate the people are – wanting to drive you, guide you, paint your nails, sell you sarongs, give you massages. Again and again you hear that there are not enough visitors – not since the Balinese faith in a benign, balanced universe was shattered by the 2002 terrorist outrage.

In a boutique in Kuta earlier this year I met Mary Lambe, a 60-year-old Irish woman who visits her beloved Bali twice a year and sells Balinese jewellery on Portobello Road. I thought Kuta was crowded and noisy, but she told me that it was nothing compared with life before October 2002. Lambe was in town when terrorists exploded bombs at Paddy’s Bar and the Sari Club – she heard the blasts, shared the shock and outrage, and is now a returning witness to how the island has changed. “Tourist numbers are down. Lots of people have gone bankrupt. It makes me sad,” she said.

Along the narrow alley, the site of the outrage is marked by an impressive memorial. Tourists stand in silence reading the names, divided into groups according to nationality – the largest number being Australians. “So many Balinese, too,” said the middle-aged woman on the beach selling shell jewellery. I bought some items. You have to. These beach traders pay to be licensed, and some days they make nothing at all.

In a rarefied world of grand hotels it is easy to forget the real Bali, pampered as you are by the best service. We had begun our visit at the new Orient-Express hotel, the Ubud Hanging Gardens, built up one side of a ravine in a wooded area north of Ubud. Considered the artistic centre of the island, Ubud is too spread out to be walker friendly, but local drivers charge little and need the trade.

The Ubud Hanging Gardens is a perfect example of hotel-as-destination, since it’s hard to leave your pavilion and its private plunge pool. You travel up and down the steep site on a little funicular, and the two-level pool is spectacular. We went for a guided morning trek through the village next to the hotel, to the forest and rice fields, where gangs of people worked with covered heads in heat that was already exhausting by 9.30am. Our fellow trekkers were French, Russian and Japanese.

After three days in Ubud, we headed south again to stay at the island’s other Orient-Express hotel, Jimbaran Puri Bali. This is so near the airport it would be ideal for the first couple of nights, the continuous boom of the surf lulling you to sleep. Here the hotel was not a destination in itself; the beach – to dine on, play on, stroll on – is all. We strolled past rows of seafood restaurants to watch the locals pushing out their spidery fishing boats, and generally cavorting on the sand: rich, joyful teeming activity.

A 30-minute taxi ride away is Ulu-watu, the clifftop temple where wild monkeys mug tourists for anything edible they might be carrying, and each evening dancers stage the classic kecakfire dance as the light fades. The huge “choir” of men chants “cak-cak-cak” while the beautiful dancers enact the barely comprehensible story of Rama, Sita and Laksamana, before the thrilling, fiery finale. All you need to know is that it’s the old story of good versus evil, like the black and white of the men’s costumes.

After six days of luxury in hotels we wanted a change. So a driver took us two hours eastwards, to sweet little Candidasa, a small strip of hotels and restaurants along a rocky shore.

We checked into Ida’s Homestay – one of those small places you find all over Bali, with an open-air bathroom, stunning carved wood pavilion and peaceful atmosphere. But the man who looked after the rooms was sad because we were staying only for one night and were the only guests. “No tourists,” he said mournfully.

Next night we moved to the slightly more upmarket Ida’s Beach Village, where one of the staff told me that since 2002 he had worked only one week a month – and he had a family to feed. With such hardship in mind, we hired a driver for a day’s tour of the area, taking in Tenganan, the picturesque village of the Bali Aga, who make traditional double ikat cloth, and (oh, joy) accidentally coming across a temple ceremony in pouring rain. We were invited in like honoured guests.

After three nights in Candidasa (and if you go to Bali, you must travel beyond the south) we went to Kuta for our last two nights – taking pot luck with accommodation once more. And again we were lucky, for Poppies, one of Kuta’s oldest, prettiest hotels, had one room: a lovely “cottage” in the exquisite garden. From there we walked straight out into the land of T-shirts, surfboards and bars, slightly depressed because everybody was selling the same thing.

The famous sunset on Kuta beach didn’t happen for us; the surfers were silhouetted against a melancholy grey sky. But I don’t want to give the impression that Bali left me sad. I pray for it to recover, although with the continued threat of terrorism allied to environmental pressure, it is hard to see that the boom can ever return. Yet the lovely people I met live in one of the most beautiful places on earth – so how can tourists bear to stay away?

Need to know

Bel Mooney travelled to Bali with Trailfinders (0845 050 5871, www.trailfinders.com), which offers tailormade holidays, including three nights at the Jimbaran Puri Bali (www.jimbaranpuribali.com), three nights at the Ubud Hanging Gardens (www.ubudhanging gardens.com) and return flights from London with Qatar Airways from £829pp, based on two sharing.

Where to stay: Ida’s Homestay (00 62 363 41096), a thatched bungalow, has B&B doubles for £17. Ida Beach Village (00 62 363 41118/9), 17 traditionally styled houses, a pool and a café, has B&B doubles from £25 a night. Poppies (00 62 361 751059, www.poppiesbali.com) has doubles from £40.

Changing face of Bali
Will Hide

Spread your towel on the golden sands of Kuta Beach six or seven years ago and it was a fair bet that the accent you would hear around you would be Australian. For years this was the traditional Aussie spot for a fortnight in the sun. Exotic, but still reassuringly close to home.

But following bomb attacks on Bali in 2002 and 2005, the bird flu scare and the after-effects of the Boxing Day tsunami elsewhere in Indonesia, many making the short flight from Perth or Sydney have given up on the island.

In 2001, 240,000 Australians visited Bali. That figure had shrunk to 118,000 by last year. British visitor numbers have dwindled too, from 116,000 in 2001 to 57,000 last year.

In their place, though, are Russians, South Koreans, Taiwanese and Chinese – almost 40,000 of the latter last year. Japanese remain the most numerous visitors.

With the Australian Government still issuing travel warnings – “We advise you to reconsider your need to travel to Indonesia, including Bali, due to the very high threat of terrorist attack,” says www.smartraveller.gov.au this week – the Bali Tourism Board can only hope that one day deep wallets and short memories will mean Australian and British visitor numbers return to previous levels.

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