Advertising campaigns painted it as the party island of the Great Barrier Reef, and it was later the paradise of Contiki's 18-35 set.

But like most who party hard, Keppel Island found that late nights eventually wear thin and there comes a time when a different approach is required.

The Mercure Resort chain has now stepped in to reincarnate Keppel Island as an affordable family resort, a move that's proving even more popular thanks to Virgin Airline's new direct service to Rockhampton from Sydney.

Keppel's value – families can stay from $142 a night for instance – is drawing young families, couples and honeymooners in search of a good value holiday among the notoriously pricey islands of the Great Barrier Reef.

The only drawback is that the resort itself is showing the signs of all those late nights.

The decor is stuck in the '80s and rooms need a good coat of paint or three, although management says regular maintenance takes place.

Even in the high-end Hillside Villas, which have views back to the mainland, the beds and pillows have definitely reached the end of their life spans and some of the fixtures need a good lick of paint.

Anyone expecting fine dining will be disappointed, too. The most exotic dish the night we dined was paella and, despite Keppel Island being in the middle of one of the reef's prime fishing spots, fresh fish was not on our menu.

But paint, pillows and paella aside, Great Keppel's greatest asset is its crystal clear blue water and bright white sandy beaches, with two of the largest and most beautiful right in front of the resort.

The grounds are immaculate and sprawling bright green lawns, sparkling blue pools, swaying palms and tropical plants complete a perfect island picture.

There are three large swimming pools, including one with a bar, two spa pools, tennis and squash courts, a soccer field, a kids' club, a croquet lawn, mini golf course and a beach volleyball court.

Like most island resorts, the non-motorised watersports such as snorkelling, sea kayaking, catamarans and windsurfing are free, while there's a charge for jet ski tours, para sailing, water skiing and snorkel trips.

And if you're into hoofing it around the place there are about 10 graded bushwalks leading either to deserted beaches or lookouts.

Honeymooners and couples can be catered for with trips to isolated beaches or formal breakfasts served right on the beach.

Keith from the Keppel Coast Dive Centre has been running scuba diving trips around the Keppels (there are two main islands, North and Great Keppel) for more than a year now.

After a lifetime diving through Australia and Indonesia, he loves the Keppels as there are about 100 dive sites within a half-hour boat trip from the mainland. Elsewhere, it can take about an hour to reach the diving spots from more northerly destinations such as Cairns or Port Douglas. Turtles, snakes, thousands of reef fish and colourful coral are seen on the dives and most recently the dive boat was visited by several whales.

If fishing and cruising is more your speed, fully catered charters are available from Great Keppel Marina on the Beneteau yacht Grace.

Grace motors out of the marina daily and sets sail for a deserted island beach. Owners Stuart and Sandra provide lunch and snacks and can organise fishing, snorkelling and coral viewing.

On shore, the Capricorn Coast region of Queensland offers other diversions in the coastal town of Yeppoon, the Capricorn Caves and the Byfield State Forest and National Park to the north.

The Capricorn Caves are 23km north of Rockhampton and are the state's oldest tourist attraction.

Entering the caves, discovered by accident by explorer John Olsen in 1882, feels like a scene out of Picnic At Hanging Rock, with the enormous limestone walls appearing suddenly out of the trees and a dark fissure beyond.

Inside, the fully lit caves offer all the crazy limestone formations anyone who's been to Jenolan would be familiar with, plenty of bats and a chapel in which dozens of weddings have taken place.

The writer was a guest of Virgin Blue and Capricorn Tourism.

The Sunday Telegraph