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It was Sunday afternoon and the town square was humming. The brass band blared from the wrought iron bandstand, families promenaded and old men gossiped in the shade of the neatly clipped box trees. Under stripy umbrellas belonging to gaily painted hotels, we were drinking cocktails and playing cards. The people at the table next door were in exuberant spirits and powerful voice as they joined in the traditional songs.

The South of France? Italy? Spain? No, this is the old silver mining town of Guanajuato in the heart of Mexico. When people describe somewhere as a "best kept-secret", they are usually referring to an unpolluted beach or a charming local restaurant, but virtually the whole of inland Mexico - an area larger than France, Italy and Spain put together - is a best-kept secret.

Mexico suffers from bad PR. We have been fed a diet of spaghetti westerns with vast empty landscapes and a lot of mustachioed extras sneering, "eh, gringo". The idea of a Third World Mexico has been perpetuated by the Americans' reluctance to voyage beyond Acapulco or Cancun for fear of contracting gippy stomachs or being coshed over the head with a bandolier - neither of which afflicted me or my friends in over a month.

Oh yes, the desert exists (during a two-day drive from Mexico City to San Antonio, Texas, my companion caught me scanning the featureless horizon and voiced my thoughts: "I can't see anything to comment on, can you?"), but go south of the seedy border territory (that's about 12 hours south, until you're on a parallel with Guadalajara) and inland from the faceless concrete beach resorts, and you discover the real Mexico, one that is far less Americanized than Britain, one that is proud and cultured, and one that repeatedly feels like southern Europe without the tourists.

It is certainly a surprise to travel through the barren hills north-west of Mexico City to Guanajuato, crammed on to the hillside at 2,000 metres, and find yourself in a town straight off the Amalfi Coast of Italy. Steep winding alleys lead past precariously terraced houses and open on to plazas with churches and bell towers. Subterranean passages cut through the rock, and edifices, whether domestic or ecclesiastical, sing out in Mediterranean pinks and ochres against vivid skies. It's hard to believe the sea isn't lapping around the corner.

Here, the town square is triangular (space is at a premium) and called the Jardín (garden) instead of the more common zocalo or plaza mayor. And it is here that you are jogged from your Italian reverie back to Mexico; for the place is teeming with mariachis. These musicians, dressed in tight bellhop suits with silver spangles up the outside leg, and armed with an accordion, diverse strings and a trumpet or two, carouse the zocalos of Mexican towns, traditionally waiting to be hired by a man to serenade his lover. In practice, anyone hires them for a few pounds for the sheer exhilaration of being blasted by a heartfelt rendition of their favourite song. Our neighbours appeared to be keeping several groups of mariachis in business, and by the time we had downed our third margarita, we were also addicted to the joyous local song, Camino de Guanajuato.

It's not all mariachis and margaritas, however. If you arrive in Guanajuato at the weekend, you may wonder if you came via a time machine. On Friday and Saturday nights, a troupe of musicians in medieval costume wanders through the town singing with more gusto than the Welsh Male Voice Choir and dispensing wine. Meanwhile, plazas are transformed into natural stages where students perform old Spanish plays. We watched an impressive performance in the Plaza San Roque, culminating in the cloaked baddie galloping off on a horse to a peal of church bells.

The flip side to all this joie de vivre is an obsession with the macabre. Just outside Guanajuato stands the Museo de las Momias, the museum of the mummies. The town's cemetery is packed to overflowing, and unless families can pay the requisite sum for eternal entombment, bodies are evicted after five years. It was discovered that mineral gases from the rock were seeping into the coffins and preserving the bodies in grotesque states of contortion. Hence the museum, which appears to be the object of a typical Mexican family outing. Disturbing: take your Qwells.

To the south-east lies Querétaro, a sophisticated little town that brings to mind the words ‘civic pride’. Early one morning I watched the town awake, streets being swept, pavements disinfected, doors polished and flowers watered. As the sun rose, façades lit up to reveal their rich, layered paint finishes of deep egg yolk or terracotta. One such façade belongs to the lovely 17th century Méson de Santa Rosa, now a hotel with interior courtyards and beautiful rooms with heavy beamed ceilings. In Italy, a similar room would set you back at least $150. Here it is less than half.

In the evening, squares fill with food stalls, selling steaming corn on the cob, delicate tortillas with a variety of fresh, spicy sauces, and a bubbling concoction of honey, apple and cinnamon, served with a crispy form of pancake. Street eating often turned out to be tastier than the restaurants, which are the one area that sadly lacks a flavour of Europe.

Exceptions are to be found at San Miguel de Allende, a town where the American influence is felt, although it is of the tasteful, upscale kind rather than the baseball-caps-and-McDonalds variety. San Miguel is one of those places in the world that has become known as an artists’ and writers’ colony, which always arouses one’s suspicions, since it usually means that it is full of pretentious drop-outs. To some extent these suspicions are founded, and San Miguel certainly has its fair share of arty-crafty shops and easels on street corners. However, most of the 1,800 expats look more like well-heeled retirees or retailers, judging by the number of smart interior design and gift shops with dollar price tags where the same figure in pesos would be more appropriate.

But Americans have their uses. The dining establishments have rare ambience, in the form of twinkly low lighting, leafy courtyards and guitarists. Super-hygiene is advertised in the preparation of food, and the size of portions and healthiness of content are very Californian. Of similar quality is the hotel Casa de Sierra Nevada, set in four 16th century colonial mansions, hidden behind unassuming doors in the wall. Inside it's all very World of Interiors, with the prettiest of tiled courtyards, overflowing with greenery. Yet the overall atmosphere of San Miguel is not remotely of a chichi American town, nor even is it as spruce as neighbouring colonial cities. It's a little shabbier, a little more Mexican in a frontier-townish way, with dusty streets, crumbling churches and a mayhem of overhead wiring.

The town is surrounded by hills and ranch-land, with fine walks and views, and the opportunity to take to the saddle, western-style - with long stirrups and the reins in one hand. We rode at Rancho La Loma, a magnificent estate that confirms that there are some very rich Mexicans around. The grounds are velvety green when all around is parched, and the owner keeps a collection of vintage cars behind glass. As we trotted down the cobbled avenue between the house and stables, tall trees casting striped shadows in our path, I felt somewhere between a cowgirl and the lady of the manor.

I was constantly struck by how easy it was to get around central Mexico. Self-driving is no problem (although signs in towns can be confusing), but the privately run first-class video coaches are bookable, swift and comfortable. My only quibble is the choice of in-transit viewing: during one five-hour ride they screened The Exorcist at full volume, followed by The Exorcist II.

There are plenty more delightful cities, such as Morelia, Cuernavaca, the silver town of Taxco and, further south, Oaxaca, where the Indian influence is stronger. But for colonial architecture, you cannot beat the very Spanish city of Puebla, south-east of Mexico City. This is the home of hand-painted ceramics, and many façades are patterned with tiles of lapis blue, yellow and white, while others have herringbone brickwork. Here, too, you will see the effervescent Churrigueresque style, where churches like La Compañia erupt in a riot of white stucco work (stay at the Hotel Colonial for a rooftop view).

The artistic highlight for me was the beautifully preserved Capilla del Rosario in the Church of Santo Domingo, decorated with breathtaking virtuosity from dome to floor with gilded plasterwork, interwoven with vines, primitive cherubs, eagles and animals. If I were the Mexican Tourist Board’s spin doctor, I'd play down the country's tacky edges and concentrate on its rich interior.

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