Just over a decade ago Lisbon was a city with a serious image problem. The capital of Portugal (a country dubbed the ‘Poor Man of Europe') was often regarded as a rundown, shambolic and poverty-stricken place. Many locals, while being proud of their lively and characterful home, found it difficult to disagree.

Today, Lisbon has experienced the kind of renaissance not seen since the 14th and 15th centuries, when the city was at the heart of an empire that stretched from Brazil to India.

The event credited with kicking off this recent rejuvenation was the World Expo in 1998. Lisbon managed to squeeze both the central government and the European Union for financial backing, as the authorities hauled the city into shape. Included in this was a new bridge across the River Tagus, a major expansion of the crumbling metro system and the massive redevelopment of the Expo site, the Parque das Nações.

Lisbon was quick to seize on the catalyst of Expo 98 and used the worldwide exposure to put itself firmly on the tourist and business map. The city has taken its traditional charms (the friendliness of its people, its buzzing nightlife, the splendour of its natural setting) and moulded them into an attractive package.

This new golden age really began even earlier, in 1994, when Lisbon was proclaimed European City of Culture, and this exposure has continued with Lisbon hosting many of the matches during the successful European Football Championships in 2004 in Portugal and then the MTV Europe Music Awards in 2005.

Lisbon's superb natural setting, spread across seven hills and hugging the banks of the wide River Tagus estuary, attracted settlers as far back as 900BC, with the arrival of the Phoenicians. But its zenith was reached in the 14th and 15th centuries, when its explorers set out to investigate the world's oceans. Many of the city's grandest buildings, such as those along the waterfront in the suburb of Bélem, are legacies of those days.

Most of the city centre Baixa area only dates back to the 18th century, when a large swathe of Lisbon had to be rebuilt after the devastating earthquake of 1755. Lisbon's famous fado music mournfully recounts the passing of the maritime golden age and such traumas as the earthquake. However, Lisboetas today have a renewed spring in their step and have come a long way, in a very short time, from the introspection and fatalism of fado.

Twenty-first century Lisbon is a vibrant, cosmopolitan and creative city that has managed to successfully marry the historic with the modern, the traditional with the cutting edge. Lisbon is at its best on languorous summer evenings, when the pavement cafes and riverside restaurants bustle with steamy life. Even in winter, when rain sweeps in off the Atlantic, any brief snatch of sunshine brings the tables back outside, in a city where enjoying life and taking time to appreciate it is still paramount.