I've been visiting Ibiza for years, captivated by its bohemian character, music scene and relaxed cosmopolitan vibe. I liked the island so much I wrote the original Rough Guide to Ibiza, a wonderful, intoxicating and exhausting project that must rank as about as much fun as you can have on planet Earth in the name of a job.

But times have changed and my love for the White Isle has faded as bling has replaced boho and the club scene has become increasingly predictable. It has also become insanely expensive: entrance to Pacha cost €64 (£57) on my last trip, and a beer was €10.

I have been increasingly drawn to Indonesia, first to Bali and later to the tiny tropical island of Gili Trawangan, whose zeitgeist is right here, right now. Just as Ibiza's halcyon days were in the early 60s (when the first wave of beatniks arrived) and the late 80s (when acid house exploded), this tiny island off the north-west of larger Lombok is shaking off its reputation as a backpacker hangout and starting to register with a hip crowd from Asia and Europe.

The scene is quite raw, unpretentious and hedonistic, with stylish bars, vibrant nightlife, a hip hotel or two and very decent diving. Designers from Hong Kong and fashionistas from Tokyo mix with travellers from the UK, scuba nuts and Indonesian creative types.

A veritable speck in the tropics – the island is just a couple of miles long and a mile across – Trawangan is an hour or so by fast boat from Bali. (It's also 1,500 miles from the earthquake-hit Padang area of Sumatra and was completely unaffected by the devastating quake there three months ago.)

All the desert island clichés are present and correct: dazzling white-sand beaches fringed by coconut palms, turquoise waters and a coral reef. It's still possible to live the tropical dream – snorkelling, feasting on fresh seafood, then lounging or dancing under the stars – for a fistful of Indonesian rupiah. But if your budget is bigger and your comfort zone narrower, there are some superb new accommodation options. Seriously stylish thatched-roofed cabins (most built in local "rice barn" style) are replacing creaky old A-frame huts. Expect polished timber floors, hand-carved beds with gorgeous linen, and open-air bamboo-walled bathrooms. Those at Dream Village (around €50 a night) have front decks facing the island's best sandy beach.

Of course, there are plenty of idyllic islands in south-east Asia with decent hotels and a lively bar or two. Gili Trawangan's trump card is that there is no traffic: no cars, motorbikes or motorised transport at all. Not one moped. Nada. This is not accidental; locals have opted for relatively sustainable development, determined to avoid the mistakes that have turned southern Bali's paddy fields into a traffic hell. The only way to get around is aboard a cidamo – a kind of horse-and-cart "taxi" – on foot, or by bicycle. You can walk around the entire shoreline in a couple of hours along a delightful path that meanders between coconut palms.

Trawangan may be increasingly prosperous but the atmosphere remains bohemian, with a sandy high street where magic mushrooms ("Take you to bloody heaven and back – no transport necessary") are on sale alongside hand-made jewellery and sarongs. The main drag has rickety timber warung (canteens) rustling up nasi goreng (Indonesian fried rice) juxtaposed with sleek bars such as the über-stylish British-owned Horizontal, with its decadent cocktail list and modern menu.

At night these beachfront bars play lounge music and chilled electronic tunes next to the waves, while later the action gravitates to one of the designated party venues – Friday nights at Rudy's are a blast, the dancefloor bouncing to pumping house and trance. There are no entry fees to these low-key raves, which are packed with an unlikely mix of living-the-dream travellers, Asian clubbers and long-haired Trawangan beach boys.

Until a year or two ago, a party night in Trawangan meant an excess of industrial-style repetitive beats courtesy of a local DJ of dubious repute. Times have changed, and now DJs over from Bali often spin the discs, with the odd superstar turntablist dropping by – Timo Maas played here in 2009. Globally renowned DJs are prepared to play the Gilis for free, revelling in the joy of playing to a relaxed crowd on a dream beach.

During the day, most people gravitate to the coral reef that fringes Trawangan and its two neighbouring islands. Trawangan's marine environment is on the road to recovery after years of overfishing (and the effects of El Niño in 1997-8, when soaring water temperatures bleached the coral). Four years ago the islands' six scuba diving schools cut a deal with locals to safeguard the reef. Fishermen would be paid not to fish in the area, and it was hoped that marine life would recolonise the coral.

The effects are remarkable. Not only have the top predators (metre-long white and black-tip reef sharks) returned in numbers but smaller species (including ghostly looking pipefish and several types of sea horse) are prolific, too. Scuba-nuts can be fairly sure of spotting turtles, and vast schools of lumbering bumphead parrotfish cruise by on full-moon evenings, gobbling up coral spawn. The sea is usually so clear that it's possible to pick out individual grains of sand as you snorkel offshore.

In tandem with the fishing embargo, a reef regeneration project called Biorock ensures that stray or loose living corals are collected and transplanted onto frames beneath the sea. Electrodes supplied with low-voltage currents cause electrolytic reactions, accelerating coral growth and ultimately creating an artificial reef. These Biorock installations are just off the main beach, at a depth of about eight metres, and make a great snorkelling experience, with clown fish darting in and out of the coral and purple-and-yellow nudibranch sea slugs clinging to the embryonic reef.

The fishing moratorium has been a great success but it has created a cultural conundrum. Trawangan was uninhabited 50 years ago; the first settlers were Bugis fishing people from the island of Sulawesi. Their descendants' way of life is now very much tied to tourism rather than fishing. Virtually all locals are Muslim, and it's good to respect sensibilities. Bikinis on the beach are fine (though topless sunbathing is a no-no) but it's best to wrap a sarong round your waist for strolling around. Alcohol is widely available and though most locals fast during Ramadan, and parties are suspended for the month, visitors are free to consume food and drink (including alcohol).

Party head or not, the island remains a delightful place to kick back for a week or so, spending days horizontal in a hammock, or suspended over a coral reef, snorkel in mouth.

And if Trawangan sounds a tad too developed, consider one of the other two Gili islands: Meno is totally tranquil, with a population of just 300 or so, while Air has a little more going on, with a strip of beach restaurants, though no nightlife.

Essentials

