In the remote hillside town of Lalibela, almost 400 miles north of Ethiopia’s capital of Addis Ababa, a new communications mast and the odd tumbledown shack advertising internet access are rare indications that the 21st century has arrived.

Otherwise, life in these dusty streets in the shadow of the distant Bugna mountains seems almost Biblical.

Many of the 25,000 inhabitants still dwell in turkuls – traditional round two-storey thatched mud and wood houses, with their livestock on the ground floor. Most homes lack electricity, and water is fetched from standpipes, often some distance away.

Donkeys are still the beasts of burden, cars rare. Yet in the midst of these humble surroundings, an astonishing piece of medieval history is widely acclaimed as the eighth wonder of the world.

Twelve rock churches, painstakingly hewn by hand in the 12th and 13th centuries from unforgiving volcanic rock, are sunk into the ground and surrounded by networks of 40ft deep trenches, virtually invisible from the surrounding hills.

There are some 1,000 rock churches in the country but none as breathtaking as these, now part of a UNESCO World Heritage site. The Church of the Holy Saviour, or Bet Medhane Alem, is the largest monolithic rock church on Earth.

Legend and myth surround their construction but it is documented that a 40,000-strong workforce - helped by angels - laboured for more than 25 years to complete these buildings, clustered closely together in two groups and hidden below ground level. King Lalibela of the Zagwe dynasty (later Saint Lalibela) wanted to hide them from pagan raiders who destroyed other early Christian churches.

Guided by God, he aimed to create a new Jerusalem in an Ethiopia that remained largely untouched by the surrounding world for hundreds of years.

Our group ventured down the steep rock steps and tunnels in the volcanic tufa (one more than 100ft long which we braved with the help of lighted tapers) that link the churches, many of whose surrounding walls contain graves and hermits’ caves.

The churches, among the most extraordinary architectural creations of human civilisation, are easily reached on foot, although a certain nimbleness is needed to negotiate rocky mazes around them.

All are active churches and visitors are likely to find a service under way, accompanied by atmospheric chanting and the steady thump of the kebero, the church drum. There are said to be 1,000 priests in the town.

To spend time in these surroundings, almost 50ft below ground level, among edifices almost 800 years old, feels like being in another world.

Most impressive is the Church of St George, which from afar appears as a giant stone cross carved into the flat rock. As you approach, you realise this is the roof, surrounded by a 50ft gap forming the chasm in which the church stands.

Lalibela is a centre of religious pilgrimage - up to 40,000 people arrived on January 6 to celebrate Christmas - and is the most visited of Ethiopia’s tourist attractions.

It is a welcoming place: children follow you through the streets and mountain lodge-type hotels accommodate visitors.

After touring the churches we enjoyed the peace of a quiet garden for a traditional coffee ceremony. Coffee was first harvested and drunk in Ethiopia and this formal affair can take up to two hours.

Sitting under a eucalyptus tree, we sipped local honey wine (Tej) and the fierce spirit arake - small measures only are recommended – while charming townswoman from Alem slowly roasted the beans, before grinding them with pestle and mortar and boiling them over a charcoal burner as the smell of incense from a machesha burner wafted over us.

We flew 15 miles from Addis Ababa to Lalibela’s small airport and then took an exhilarating drive across sparse, open hillsides from the town.

The trip is part of the two-week Discovery Tour by operators Cox and Kings. It also takes in Axum, Ethiopia’s early centre of civilisation and reputed home of the Queen of Sheba and the Ark of the Covenant, the first capital of Gondar at the foot of the Simien mountains, and Bahir Dar, near the source of the Blue Nile on Lake Tana, with its historical island monasteries.

By chance, our arrival in Addis Ababa coincided with the major Ethiopian Orthodox Church festival of Timkat, celebrating Christ’s baptism by St John in the River Jordan.

With nearly 60 per cent of the population being Christian, there are three days of flamboyant and colourful celebrations. Congregations from every church carry their tabots, the symbol of the Ark of the Covenant, the original of which is said to be held in a northern Ethiopian church, to a central area nearby, covered by lavish cloths so they will not be viewed by unbelievers, to be blessed at a special mass before being returned.

We watched Addis Ababa’s largest ceremony at the Jan Meda racecourse, a vast area which welcomed the noisy arrival of elaborately-clad priests, church choirs, and singing, dancing followers.

After the mass next morning by the local patriarchs, many of a crowd estimated at up to 100,000 pressed forward to be doused by priests with Holy Water from the central baptismal font in frantic but joyful scenes.

In an Addis Ababa restaurant, a traditional meal for our group of six was served on one huge platter on a central low table.

The platter is entirely covered with a layer of the staple Ethiopian bread injera, a sort of sourdough-like fermented pancake, and the dishes of peppery chicken and meat stews, cheeses and yoghurts, are piled on top.

You break off pieces of the injera - there is no cutlery - and use it to scoop up food. It takes practice and can be messy.

Tourism in this often troubled country is still in its infancy, halted entirely for more than three years from 1998 during the Eritrean War.

Now 400,000 visitors a year arrive mainly from the UK, France, Italy and Germany. The total grows annually by 25 per cent, and a five-year drive aims to increase that to a million, to earn targeted revenue of $2bn.

Construction, including new hotels, is booming. Ethiopia boasts one of the lowest crime rates in Africa, far lower than many Western European countries.

Tourism chiefs know the country has deep-rooted image problems of war and famine, with some border areas still out of bounds. But 40 per cent of first-time visitors, mainly keen to see historical sites, return.

The vice-president of the Ethiopia Tours Operators Association, Assefa Azene, says: “We did have a bad name but that is now forgotten history for us.

“People are beginning to understand this country is very safe. Forget the image and experience the reality. When people see it for themselves, they happily come back.” - PETER BEAL

Key facts - Ethiopia

:: Best for: History, culture and scenery.

:: Time to go: All year, but September is when the flowers bloom. Timkat festival is on January 19.

:: Don’t miss: The rock churches at Lalibela.

:: Need to know: Dress conservatively at religious sites.

:: Don’t forget: Hard currency. Credit cards can be difficult to use, especially outside Addis Ababa.

Travel facts

Peter Beal was a guest of Cox & Kings, which arranges group and private travel to Ethiopia. Its Ethiopian Odyssey is a 14-day/11-night escorted group tour from �2,950, including return flights with BMI, transfers, guided excursions and full board. Private tours start at �3,760. British Midland International (bmi) flies to Addis Ababa three times a week, via Amman, from �505 return incl taxes and charges.

Cox & Kings reservations: 020 7873 5000 and www.coxandkings.co.uk.

BMI reservations: 0844 8484 888 and www.flybmi.com.