Where can a frenetic urban family go to chill out quietly in the sun? One of Europe's most popular package holiday destinations doesn't seem the most obvious answer. But on Corfu, we found serenity and solitude. We discovered - as far as a three-generational extended family of seven ever can - outer tranquility and inner contentment.

This was a special experience. Since the tourist boom 'n' build days of the 1970s, Corfu has been one of the most developed and crowded of the Greek islands, welcoming more than one million visitors a year. The north and west coasts are lined with strings of high-rise hotels and huge apartment blocks, built with so little control they look as if a child has constructed them.

But in every area of over-development there is an oasis, and on Corfu it's San Stefanos. Clinging to the edge of a bay on the less-visited east coast of the island, looking across a narrow channel of the Ionian Sea to the barren hills of Albania, development in this tiny village consists of three tavernas, a couple of bars, and a small supermarket. There are no hotels and no large apartment blocks. The windy, narrow road down to the village acts as a fortress against foreign invasion: it is too treacherous for a tour bus to navigate. You can only reach San Stefanos by car or boat. Our hired people carrier was the largest vehicle in the hamlet.

We needed it to drive us all - my boyfriend and I, our toddler twins and 10-year-old daughter, my mum and the au pair - up through the olive groves on the hillside behind the village, to Villa Kiki where we were staying. In the sun, and after an exhausting lunch of grilled meat and cheap wine (every taverna on Corfu offers exactly the same menu - grilled almost anything with a selection of dips), the thought of having to walk back up the steep hill to home was just too much for us.

Villa Kiki was our tranquil haven. The kids loved the coolness of the pool, with its views down over the verdant valley. The granny loved just sitting under an umbrella, watching the hills as if they might move if she didn't keep an eye on them. My boyfriend loved the fertility; Corfu has exceptionally heavy rainfall, making it a major provider of fruit and vegetables to the Greek mainland. Rising up behind the villa was a vast garden of vines, figs, limes, lemons, peaches and pears. Each morning before breakfast, he went gathering, returning with bunches of grapes and black and green figs, so fresh they burst bright red as he held them, leeching their sticky white juice. He plucked small handfuls of fresh oregano from the pots, rubbing it between his palms for the joy of the smell, then sprinkled it over sliced tomatoes.

It was tempting to spend the whole fortnight cocooned in Villa Kiki, but every day we forced ourselves to venture forth from our Garden of Eden for a swim in the sea. The coastline around San Stefanos is all pebble - thank goodness. It's the lack of sand that has also helped to keep this slither of Corfu's east coast so low key; big developments require soft, yellow beaches.

For the first time, 10-year-old Storme felt comfortable swimming in the sea, it was so calm and cradling. And it was perfect for the twins Savanna and River, who had never been in seawater before. It was warm, clean, with a long shallow slope before the water became too deep, and no surf. Only when one of the large ferries passed between us and Albania, working her way up towards Venice, was the surface of the salty water disturbed. Even then, it was slight enough to just gently rock the lilos.

Whichever nearby cove we visited, there was always a taverna that overlooked the water with an awning to retreat under at midday. And although, sadly, taverna food is better in Britain than Corfu, at least they all had high chairs. Each of the three tavernas on San Stefanos waterfront had its own tiny wooden pier, and there was a place to hire five-horsepower outboard engines so that when the wind wasn't up, you could land at a cove that a car couldn't reach.

But hiring a small boat to skipper yourself is expensive; in general, Corfu is not cheap. Curiously, it cost far less to hire a man together with his own craft. And because his boat would be bigger, and he'd know the coastline well, it meant you could go further under his guidance. It also meant that we adults could concentrate on making sure that the toddlers didn't tip overboard, while the boat was piloted by a professional.

We hired Captain Ioannis and his vessel for the day, and together they carried us south to Kalami, where the brothers Lawrence and Gerald Durrell lived in the 1930s. Their White House, lapped by the sea, is now a small hotel and restaurant (with identical food to that offered in every other taverna). Coming up north towards San Stefanos again, we stopped off at the village of Agni, where it's said Shirley Valentine was filmed and a "Tamsin Outhwaite Was Here" sign hangs over one of the three tavernas.

These unremarkable monuments are about as much in the way of sights that Corfu's east coast offers. There are no fine buildings, dramatic scenery or grandiose ruins. What there is in abundance is small, sensual pleasures: the feel of a freshly picked fig as it bursts between your lips; the shade from the midday sun offered by an ancient, twisted olive tree; swimming under moonlight in the warm, soupy sea.

We were always glad to return home to the cocoon of Vila Kiki each evening. We sat drinking bottles of homemade wine, bought on the roadside in old beer bottles, and looked over towards the mountains of Albania, pink in the twilight. We enjoyed the sweet taste of our freedom.

There is great loyalty to this small place; we met many families who had been coming back to San Stefanos year after year, making friends with other families who made the same annual pilgrimage. Strangers to each other for 50 weeks, they would spend a fortnight each August meeting almost daily in one of the waterfront tavernas or bars, the parents with the parents, the kids with the kids, so that each generation was guaranteed company of their own age on holiday.

I was worried I would get bored. But it's surprising how quietly and quickly two weeks pass when you're doing nothing except indulging yourself in small ways. And now, when anyone tells me to avoid a certain destination because it's overrun by tourists, I ignore their advice. Everywhere has somewhere you can retreat to. From our hillside, Corfu didn't seem so crowded after all.

Way to go

Getting there: Direct Greece (020-8785 4000, brochure line 0870 5168683, directgreece.co.uk) offers one week at the Villa Kiki in San Stefanos, Corfu, from £265 per adult, based on five people sharing two-bedroom accommodation with a private pool. The price includes direct flights from six UK airports (including Gatwick, Manchester and Glasgow) resort transfers and car hire.

Further information:
Country code: 00 30.
Time difference: +2hrs.
Flight time London-Corfu Town: 3hrs, 5mins.
£1 = 1.44 euros.