Sweating gently cheek to cheek in the sauna is an excellent way to break the ice. Not that the mood at Lake Myvatn in northern Iceland was at all frosty last April. And the weather, an unseasonably warm 15C, was more like an Icelandic June.

Reykjahlid, on the shores of Lake Myvatn, is a world away from the clubbing capital of Reykjavik. The village does have a blue lagoon, dominated by the Krafla geothermal power station on the skyline, but the extreme heat of its natural hot springs has not yet been regulated so it will not be open for bathing until after Easter next year.

Every summer, some 100,000 tourists come to Myvatn to fish for salmon and trout, to watch the tens of thousands of breeding birds, particularly goldeneye ducks, and to hike around the lake. Yet, in Icelandic, Myvatn means “lake of the midges”, so they have to wear net veils or get bitten.

But the area is little visited in the winter and spring, so the few off-season tourists are allowed in the local sauna, a pair of fibreglass huts put up by the villagers, one for changing, guarded by an amiable Labrador, and one for sitting in the natural steam that emerges from the rock.

Grandparents and kids alike budged up on the wooden benches to make room for the maximum capacity of five-a-side. Everyone wore swimsuits - maybe they’d heard that the reserved British were coming - and a friendly competition began to avoid sitting under the condensation drip in the corner as each in turn came back in after a cold shower.

We needed to relax. The previous night had been a late one. Turning in tired after two flights and a minibus journey, I was roused by my host at the Hotel Reynihlid, Peter Gislason. “Have a look outside,” he said. A green light was smeared across the starry sky. It wasn’t the most spectacular of northern lights, but it was an unexpected bonus. The lights usually appear only on colder nights. Peter was determined to seize our chance. “Let’s get in the car,” he said, and sped us up and away from the lake. The lights shifted and changed in the sky. “Locals know to get out of my way on a night like this, when I’m chasing the lights,” he said.

We stopped on the deserted road. Geese honked in protest at our disturbing their sleep. The mud pools bubbled up their sulphury stench. The power station glowed satanically. Once again, we saw the dancing lights veiling the stars above us. I shivered and wished I’d thought to put on some socks.

The geese went quiet. “Listen,” said Peter. “That sound you think is a river - that’s the ice melting.”

Because of the thaw, we were unable to take advantage of some of the area’s winter activities, such as cross-country skiing and Super-Jeep and snowmobile safaris. But we saw the treeless landscape much as the astronauts Neil Armstrong and Edwin “Buzz” Aldrin must have experienced it when they came here for moonwalk training in the 1960s. “The blacker the mountain, the newer the lava,” said Peter, who until recently had a room full of official seismographs at his house. The last major eruptions in this area, the Krafla Fires, were only 20 years ago. But we did have the opportunity to hike up to the Viti crater, cross volcanic lava fields and fissures and stand on the edge of Dettifoss, Europe’s most powerful waterfall. Icelanders don’t seem to believe in separating people from nature. You can creep as close to the water as you dare and at Easter we were the only people there.

Our riding expedition on sturdy pure-bred native horses took us too close to the edge of the lake for my liking. Of course, the horses know exactly what they are doing, even if the path is only one hoof wide, but Jane Plummer, a reception class teacher from Harrogate in Yorkshire, found it as unsettling as I did. “Horses are like children,” was her view, “they can sense when you’re not in control.”

The wife of the riding school owner ran alongside for more than an hour to reassure us, providing a striking example of how healthy life in this part of Iceland must be. Her husband, born in the mid-1930s, had set up the school on retiring as a secondary school teacher, and she was, I’d guess, of a similar age. Jane and I celebrated not falling off with a lunch of home-smoked Atlantic char from the lake and discussed Iceland’s famed expensiveness as a holiday destination. The restaurant we sat outside in the Easter sunshine has been visited by celebrities such as Mick Jagger and Chelsea Clinton, yet the pleasures of the food and the 180-degree view of the lake are a simple luxury. Jane, on holiday with her boyfriend Ian, said: “This is a special treat for us, but you could spend as much on another holiday and not see all these wonderful things.” Peter agreed:

“People who appreciate Iceland like nature and its colours - otherwise, it’s just rocks.”

Discover the World’s Arctic Edge holiday in north Iceland’s Lake Myvatn region includes three nights’ Bamp;B at Hotel Reynihlid, international and domestic flights; transfers; airport taxes and local assistance at Myvatn, from pound;524 per adult and pound;383 per child sharing a room with adult(s). Optional activities such as cross-country skiing, hiking and horse-riding are booked and paid for locally. Extra nights in Reykjavik from pound;27 per person per night. Tel: 01737 218 800.