Cambodia -

n the heart of Phnom Penh, at the confluence of the Mekong and the Tonle Sap, there is a small sand island. A woman is walking along its edge, where tall reeds sway in the river breeze. She carries a basket and strides purposefully into the wind, her long black hair trailing behind her. As I stare from the deck of my cruise ship, something suddenly feels very wrong. There doesn't appear to be a boat, or a bridge, or any conceivable way for her to have gotten out there in the first place. As we turn the corner and the mysterious lady slips out of sight, I'm sure I catch a twinkle in her eye as she continues her march to who-knows-where.

The Kingdom of Cambodia has a track record of playing games with the western mind. Inspired by – and often personally involved in – the colonial occupation, wars and years of genocide, a raft of writers and filmmakers have presented Cambodia as a baffling, beguiling land where normal rules are reversed and nothing makes sense. It's been portrayed as a hedonistic playground, a giant madhouse, a secret hideaway and, in the darkest years at least, hell on earth.

Since not everyone has the stomach to spend their annual leave experimenting with their tolerance for lunacy, the first piece of good news is that sanity is being restored to this troubled country. Modern hotel facilities, eloquent tour guides, improved security and efficient transport links have created a thriving tourist axis comprising the capital, Phnom Penh, the beaches of Sihanoukville and the city of Siem Reap, gateway to the temples of Angkor.

The second piece of good news – at least for those who relish the exotic and edgy side of Indochina – is that Cambodia's recovery is only half complete. It's still only partially sane.

The capital, Phnom Penh, is definitely the halfway house. The city feels refreshingly underdeveloped compared to other Asian metropolises, and there's a notable lack of high rises. In fact, not many buildings make it to three storeys. One of the few to stretch to that giddy height is the National Museum. On the slightly unkempt lawn in front of the dramatic spires, locals play badminton with an appealing indolence, entirely in keeping with the mood of the city.

Up on the hill at Phnom Wat, one of the capital's many stunning pagodas, a boy tries to sell foreign tourists wild birds. The ruse is simple. He catches an animal, cages it, makes it look as dismal as possible and sells it to a soft-looking foreigner who, having bought the bird purely for the purpose of releasing it, watches in dismay as the lad immediately scuttles off to trap another. The system works, testament perhaps to the lingering madness that remains, perhaps to perennial tourist gullibility.

Cambodia is at its edgiest in Phnom Penh. The city has a gun problem, tempered in recent years but not entirely stamped out. Wandering the streets as a westerner, you are sure to be approached by dope pushers and pimps, most of whom have a sideline driving moto-taxis. Cambodia's capital is without a doubt one of the most overtly sleazy cities in the region.

But Cambodia can also be at its most comfortable here. Gucci stores rub shoulders with scrap shops, and the glitzy new casinos have reassuringly stern security guards and USD 10 minimum bets. The Tonle Sap riverfront is a great spot to take in the well-preserved colonial ambience, with plush bars and hotels lining the boulevard on one side and palm trees gently swaying on the other. The four-star Hotel Cambodiana, Phnom Penh's best-located hotel, overlooks the water, and next to it is the impressive Royal Palace, whose silhouetted spires form an elegant skyline, especially when viewed from one of the cruise boats that can be hired from Sisowath Quay.

Phnom Penh may be the centre of the new tourism axis, but the city driving Cambodia's current tourism boom is 230 kilometres northwest. Siem Reap's wholesome exoticism is a refreshing contrast to the sleaze of the capital. As the gateway to the world-famous temples of Angkor, the town has been transformed in recent years to accommodate a new breed of leisure traveller brought by improved transport links, particularly with neighbouring Thailand. Two golf courses are being built and there is a cleanliness and orderliness to city life that is wholly absent from the capital.

At night in the Psar Chaa bar district, the sound of clinking glasses and late-night music drifts from second-floor balconies into the balmy night air. Wooden fans whir serenely. By day, kaleidoscopes of shadow and sunlight shimmer in sandy clearings where wooden huts nestle snug among the green palms. Immaculate paddy fields are dotted with water buffalo and workers; the scene is a rural idyll.

The reason for the town's orderliness and affluence is not hard to divine. Mass tourism means 3,000 people visit Angkor each day. Yet even the crowds and the buses can't diminish the impact of the temples themselves. Indeed, nowhere better captures Cambodia's thrilling and unsettling aura of mystery and magic. The temples, built by Khmer rulers between the 9th and 14th centuries, stand testament to the array of architectural, historical and religious influences that shaped society here. Part of the temples' impact is in their preservation and presentation. Angkor is essentially a vast forest which requires patience to negotiate but rewards by revealing its treasure piece by piece. Ancient structures jump out of the trees at the turn of a corner. Despite the crowds, it's hard not to feel like an explorer stumbling across treasure for the first time.

Siem Reap's accommodation options are incredibly varied, featuring everything from backpacker digs to five-star luxury. On the drive into town from the airport, scores of newly built hotels-cum-palaces are nearing completion. The historic Grand Hotel D'Angkor remains the granddaddy of the upmarket options, but its rivals are numerous and equally plush.

Sihanoukville is the third point on Cambodia's tourist triangle. The 230-kilometre highway linking Phnom Penh and the south coast beach resort is pleasantly smooth, though drivers do tend to spend long periods on the wrong side of the road. This is often due to the curious mix of vehicles sharing space on the asphalt. Clearly it wouldn't do for high-speed saloons to be stuck behind ox-drawn carts or 'taxis' stacked high with locals.

Another reminder of the less progressive side of Cambodia presents itself on the city outskirts. A casually-dressed 'policeman' beckons my car to the side of the road where a man with oversized sunglasses chomps on a cigar while his lackey demands money. Judging from my driver's face, this extra 'tax' was not expected.

Sihanouvkille's stunning beaches are the chief attraction. There are four main strands circling the town and plenty more picture-postcard locations tucked away on the outlying islands. The most popular of the mainland beaches is Ochheuteal. The sea is warm all year round and, once a comfortable sunbed has been found, it's all too easy to hang around well beyond sunset. Sip on a cold beer, chat to friendly locals and gaze up at the glittering vista of stars which twinkle as darkness descends.

In Francis Ford Coppola's 1979 film Apocalypse Now, Cambodia represented the very heart of darkness and even now – beyond the wars, brutality and suffering – there's something eerily appropriate about that label. Maybe the lady on the sand island was simply caught out by a high tide, but that would be to introduce logic to a country whose seductive allure resists cold analysis. This strange, exotic atmosphere is part of Cambodia's enduring appeal. But as the beach bums and temple throngs prove, things are becoming more and more comfortable. Madness is now an option, not a prerequisite.