When the boat engine dies, the silence is absolute. The water is still and clear down to the little towers of amber weed on a seabed that slopes up gently to the beach of Dorninish. Known as Beatle Island or Hippie Island, Dorninish has been both the dream island of John Lennon, who owned it until his death, and a colony for idealistic New Agers whose tepees were eventually defeated by the County Mayo winter.

Now the 19-acre island, with panoramic views around Clew Bay, is up for sale for €300,000 (£240,000), complete with a fresh water well, the ruins of an old house – and its remarkable history.

It is one of a slew of islands on the market off the west coast of Ireland. Even as the property slump continues in the stagnant Irish economy, land is holding value, and so those who need to sell are doing so.

Clew Bay is island soup; there are some 365 "drowned" drumlins, or elongated hills, out here if anyone's counting. Some are owned by farmers, others by foreigners as a holiday home, one by the Maharishi Mahesh's followers.

Estate agent Andrew Crowley is selling two islands. "You'll not be wanting to get off," he assures visitors on the boat out. And indeed it is hard not to look at an island without the plans starting to kick in. For Lennon it was building a house. He bought Dorninish – twin green mounds linked by a natural causeway, lying just 15 minutes from the west coast of Ireland – in 1967 and got planning permission, although he never got as far as building. He shipped in a multicoloured caravan and took both his wives there.

"He was besotted with the place by all accounts," said Crowley. But at the height of Beatlemania Lennon wasn't ready to settle into his island retirement and so he offered it out, rent-free, to Sid Rawle. Rawle, the man the newspapers liked to call the "King of the Hippies", was the founder of the Digger Action Movement. He was a New Ager, interested in self-suffiency, when he was summoned to the Beatle headquarters in 1970 and offered the use of Dorninish by Lennon to try to build his utopia. Rawle had great plans for livestock and lobster pots and vegetables. But as 30 hippies with their Carnaby Street costumes and teepees arrived, local residents were horrified, remembers Sam Kelly, 63, a retired farmer from nearby Westport.

"You saw them waiting to go out, and some of then were back pretty quick, too. It didn't suit too many of the rich, pampered kids. In town we just all thought the man must be making a lot of money out of it all, but then thought, fair game to him when he made it through that first winter. We thought the place would be flooded with drugs, but not a sign of them – flooded with letters is all. People writing to him and sending money from all over the place.

"You never saw them in town. Only Rawle himself came in for anything they needed – the welfare cheques, of course. He didn't even have a boat: he'd hoist a white bedsheet up when he wanted Tommy, one of the local guys with a boat, to come and get him," said Kelly, who said he doesn't think that the hippy era left a lasting legacy.

"We're maybe a bit more bohemian than most parts of Ireland, but we had pirates living here long before the hippies. Sid Rawle was more a dreamer than a drug crazy."

In 1972 the community finally disbanded after a fierce wind helped a dropped oil lamp to destroy their tents. Rawle went off to pursue his dream elsewhere and died in 2000. John Lennon told the New York Times he planned to retire to Dorninish and had even restarted plans to build on the island when he was killed in 1980. Yoko Ono sold the island in 1984 to the Gavin brothers, donating the sale price to an Irish orphanage.

"She said she'd like it to go back to the Irish that would use it," said Michael Gavin. "And we were keen on it because a few generations back our ancestors had lived out here in the island next door, so it meant something. It was just great pasture and we've had sheep and cattle out there. The thing about the island is that no matter where the wind is coming from there's a spot that you could light a match in. It's a grand little place, lovely, but we're getting on in age now and it's time to let it go."

Others have also been coming to Clew Bay in search of something special.

Millionaire Nadim Sadek, an Irish-Egyptian businessman, bought Inishturk Beg 10 years ago and poured what local builders estimate to be up to €20m (£16m) into creating a stunning island hideaway. The main house overlooks the bay, as does its own infinity indoor swimming pool. The island covers 65 acres and includes tennis courts, four immaculately designed guest houses, farm buildings, a boat house and a pier and jetty. It is now being sold by receivers and is on the market for a recession-reduced price of €2.85m.

Andrew Crowley, of the estate agents Sherry FitzGerald in Westport, said interest was high in both islands. "It's certainly the time to get a real island bargain on the west coast of Ireland. And there's a unique thing to say you own an island, it's something special. Obviously the John Lennon thing makes Dorninish a bit extra special, while Inishturk Beg is really something remarkable. The former owner poured everything into this project and it really has to be seen to be believed. Island living is something special."

That is a sentiment shared by Chris O'Malley, who has lived on a bay island for 12 years and raised her two children, doing the school run by boat. "It's unique, it's wonderful, not without its difficulties. It can be tough, but then a glorious day more than makes up for a bad one. It's been helped by the fact the supermarket now delivers right to the mainland jetty and the shopping is that bit easier!"

A few of the smaller islands are connected to the mainland by causeways but most of the handful of people who still live or visit these mostly deserted islands are reliant on their boats. Although the bay sees the odd helicopter bringing in the landowners whose presence is carried in whispered rumours among locals, celebrities like TV personality Louis Walsh and Island Records founder Chris Blackwell.

O'Malley says the self-sufficiency plans of Rawle were long being practised by generations of Irish islanders. "A lot of the islanders in the bay are getting on now: it's very much an ageing population. But even though you might not see your neighbours out here very often there is a really strong sense of community and people look out for each other."

On Dorninish, now that Lennon's psychedelically painted caravan is long gone, only the ridges of the hippies' vegetable patches and the clay mounds which protected the tepees remain, alongside the ruins of the harbour pilot's cottage, to give a sign of former human habitation. Even the Gavins' cattle are gone. But the peace and the silence remain, and the economic woes of the mainland rat race seem far away from the velvet-turfed mounds in Clew Bay, awaiting their next generation of island dreamers.