The crusty, chewy pão caseiro loaf that I find hanging in an embroidered bag from the shuttered doorway of our village house in Pedralva every morning reminds me that this is no ordinary Algarve holiday.

As I open the door onto the small courtyard, the cool September air is fragrant with eucalyptus and forest flowers. A cockerel crows, the owner's New Foundland puppy, Urso, sets off in hot pursuit of a cat, and two silver-haired villagers, with lines etched deep into their faces, sit chatting on the doorstep, barely acknowledging my presence.

I balance on tiptoe to open the blue wooden shutters. Bright sunlight streams in from the picture-postcard narrow street of quaint whitewashed stone houses, their shiny wooden doors painted the colour of traffic lights – reds, greens and yellows – though there is no traffic or rush hour here.

Cutting the thick crust of the pão caseiro for breakfast requires patience and the biceps of Popeye but the taste is worth it. I pop to the grocery next door to buy deliciously fragrant home-grown tomatoes and sweet juicy melons to accompany the ham, cheese and eggs left in our refrigerator earlier.

Today we are off for a yoga session on Praia do Amado beach, where thunderous foam-curled waves will greet our "omms" and calming tree balances. Tomorrow we are going bird-watching in the stunning Ria Formosa nature park and on Friday I will be testing my nerve with asurfing lesson, another of the many activities on offer here.

Two years ago, the village of Pedralva, near Vila do Bispo on the Algarve's west coast, lay in ruins. Now thanks to one man's creative vision, it has been brought back to life. Like Victor Kiam, who liked the company so much he bought it, adman Antonio Ferreira visited Pedralva to buy a holiday home and ended up buying virtually the entire village.

At 42, he had been at the top of his career for 16 years but had grown tired of working day and night on campaigns and decided to take early retirement. All but seven houses in the once-thriving agricultural community of Pedralva, in the Costa Vicentina parque natural, had been abandoned, long forgotten by their owners. Just nine residents remained.

"This village used to be full of life, but when I arrived it was sad," said Antonio, sitting in the village square with wife Filipa. "I tried to imagine what it would look like if it was rebuilt, and realised it could be a tourism project for me."

 

He initially bought two small houses, then 12 more, and now owns a total of 31. Four advertising colleagues were persuaded to join the €4m venture, and the council agreed to invest €1m in roads and lighting. It took Antonio nearly two years to find the owners of the properties: some families had forgotten they even owned a house. One owner was traced via a sister he had not spoken to for 12 years. Another sale involved 28 owners, who took it in turns to cram into the attorney's tiny office.

"Everyone thought I was crazy," said Antonio. "They thought I had been drinking medronho [the local fire-water]. They said no one went to Pedralva. It was a challenge for me."

Antonio and Filipa sold everything they owned in Estoril, on the Algarve's busier south coast – house, Billabong surf shop and car – and moved to Pedralva. With them came their two children, Manuel and Maria, aged 10 and seven, and Urso, who bounds around the village with as much energy as his energetic owners. Four years later, the dreams of creating a tourism village where holidaymakers are in touch with nature, have come to fruition. The 31 abandoned houses have been restored to their rustic glory, each named after one of the area's many glorious beaches.

Ours is Ingrina, a beautifully designed two-bathroom, two-bedroom stone house with quaint shuttered windows, sky-blue round wooden beams and a terracotta roof with a typical finely carved chimney. The furniture and decor are rustic chic, the showers made of local stone. The house is cleaned daily, bed linen is crisp, fluffy towels are changed if required and the kitchen has all mod cons, including a Tassimo coffee machine.

Each house was individually furbished by a designer friend of Antonio. Some have bamboo-covered patios, others a gallery bedroom and another a kids' hideaway in the eaves. The only new building is the reception and restaurant, and the popular Pizza Pazza, which buzzes with surfers and locals.

Technophiles and children will love the Apple computer training centre in the old school house, which offers courses in creating animated videos and podcasts. A vegetable garden sells fresh produce direct to the holidaymakers and supplies the village shop. It's a far cry from the 1950s and 60s, when 200 villagers worked in the wheat fields, there was no electricity, and donkeys were the main mode of transport.

"Life was tough but we enjoyed it here," says Fernando Sintra, 71, who has lived all his life in Pedralva. "We grew all our own produce, every family had a pig, and on Sundays everyone dressed up. Villagers left in the 70s to work in hotels along the coast, so people became very lonely here. It was like a ghost town. Now there are children running around again in the streets."

 

During the day, the village is quiet, as visitors explore the eucalyptus-scented forest, picturesque villages and jaw-droppingly beautiful beaches, some accessible only by 4WD. Others head off on guided walks and cycle rides, or go fishing.

The first day we lazed on vast Cordoama beach, watching surfers ride awesome waves and paragliders swoop from the cliffs. The sea here is rougher and the beaches more rugged than in the southern Algarve, and the coast teems with surf schools. It's a great place to learn, because the waves break close to the beach so if, or rather when, you fall off, you're in shallow water.

I was booked into a group beginners' session at the Amado Surf School a little way up the coast. Standing on the sand, Jacu, our instructor, told us how to stand on the board in three easy moves. On sand, they were easy – relatively. It was quite different when there was a wave dancing precariously beneath my twitchy board.

I managed to stand and balance a few times, admittedly only for a few seconds, but the thrill of riding a wave was amazing. I was hooked.

After lunch, we walked to Bordeira beach. A 15-minute dirt track drive took us on to wild beaches at Vale Figueiras – where a naked couple found they no longer had the beach to themselves – and breathtaking Monte Clerigo.

That evening we dined on excellent sea bass at the Sitio do Forno restaurant (00 35 1 963 558404) in Carrapateira while watching an amazing sunset. The vast choice of seafood and fish in this area includes odd-looking percebes (goose barnacles, celebrated at a festival in nearby Aljezur every November) which we sampled at the O Sitio do Rio restaurant (00 35 1 282 973119) just outside the village. There was a knack to eating them but the fresh salty taste was worth the wait.

The next day we were driven by Sonia Manso of eco-tourism promoter Natura Algarve (natura-algarve.com) to Olhão for a boat trip around the stunning Ria Formosa, a lagoon enclosed by barrier islands off the south coast. We saw shellfish farms and a working tide mill, ate freshly caught mackerel on the island of Culatra and waded through warm shallows on uninhabited Barreta, where only the lark's song disturbed the peace. Through binoculars we spotted pink herons, curlews, spoonbills and terns.

That evening, we returned to the Eira Do Mel restaurant (eiradomel.com) in Vila do Bispo, where owner and chef Jose Pinheiro is famous for his flavourful slow-cooked food. On this holiday, there really is no other pace.

Essentials

 

Monarch (monarch.co.uk) flies to Faro from Gatwick, Birmingham, Luton (summer only) and Manchester from £82. At Aldeia da Pedralva (00 35 1 282 639342; aldeiadapedralva.com), one-bedroom houses start at £69 per night, two-bedroom houses from £82. Trekking and cycling guides cost from £107 for groups of up to eight; a day's surfing tuition costs £40 including equipment. For more details on the area seevisitalgarve.pt.

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