Trail Of The Unexpected: Coober Pedy

'Even the golf course is made of mixed sand and oil'

You know when you're near Coober Pedy by the disturbing road sings. One depicts a stick-man - the kind you would find in a red triangle digging up a road in Britain - hurtling head first down a mine shaft. "Keep out: Penalty $1,000 for unauthorised entry onto mining claim," it warns. Beyond lies a post-apocalyptic landscape of dust, spoil heaps and millions of bore holes down which any drunken prospector or back-peddling photographer could disappear.

You know when you're near Coober Pedy by the disturbing road sings. One depicts a stick-man - the kind you would find in a red triangle digging up a road in Britain - hurtling head first down a mine shaft. "Keep out: Penalty $1,000 for unauthorised entry onto mining claim," it warns. Beyond lies a post-apocalyptic landscape of dust, spoil heaps and millions of bore holes down which any drunken prospector or back-peddling photographer could disappear.

Halfway between Adelaide and Alice Springs on the Stuart Highway in South Australia, Coober Pedy is Australia's opal-mining capital. About 75 per cent of the world's opals come from the region, selling for up to A$10,000 (£4,100) a carat.

Most of today's 3,500 residents have been seeking their fortune since the Seventies. More than half of them come from overseas, including Greeks, Serbs, Croats, Poles, Italians and Brits. Not only do they work underground, they've built much of the town there, burrowing out homes, or "dugouts", to escape searing summer temperatures of more than 50C. Coober Pedy gets its name from the Aboriginal words kupa piti, meaning "white man's burrow".

Some miners have given up the opal hunt in favour of working for the growing tourist industry: Coober Pedy is now firmly on the backpacker trail because the Oz Experience bus stops there (00 61 2 9213 1766; www.kiwiexperience.com). The Ghan railway that crosses the continent from Adelaide to Darwin stops 33km outside (00 61 8 8213 4592; www.theghan.com.au).

I arrived with three other backpackers in an old Ford Falcon station wagon that had lost two of its six cylinders on a journey from Queensland through the Red Centre to Adelaide. We found a budget motel for the night. Had we booked ahead, we could have stayed underground in one of the naturally cooled lodgings such as the Bedrock Backpackers Cave in Hutchison Street (0061 88672 5028, from A$17.50 (£7.30) a night), or the more upmarket Desert Cave Hotel (0061 88672 5688; www.desertcave.com.au, from A$186 (£78) per night).

This really is the end of the world: Mad Max: Beyond Thunderdome was filmed here. There is not a bit of greenery in sight: even the golf course is made of mixed sand and oil. Beside the lookout at the Big Winch stands the first tree in Coober Pedy, made out of scrap metal in the Fifties. This is a great place to begin a tour, as it provides a panoramic view of town.

Below is the huge screen of the recently reopened drive-in cinema (which has another terrifying sign outside discouraging people from bringing in explosives).

Nearby in Old Water Tank Road is Faye's Underground Home, excavated by Faye Nayler and three other women with picks and shovels 30 years ago. Since then, five rooms have been added, including a swimming pool. The thought of all the blood and sweat that went into digging it jars with the pink and blue flowery linen in the bedroom: it's still lived in, and the owners will show you around for A$4 (£1.60).

One of Coober Pedy's most infamous characters lives a short drive or bus ride up Seventeen Mile Road. The self-styled "Crocodile" Harry Blumendal claims to be an exiled Latvian who spent years hunting crocodiles in the Northern Territory before trying his luck in the opal fields. His dugout, which was first made famous in Beyond Thunderdome and later by the Lonely Planet's Australia guide, is festooned with the graffiti and underwear of visitors and - so we were led to believe - Harry's conquests.

If you do want to "noodle" (rummage) on the opal fields, remember it is illegal to enter a pegged claim without the miner's permission. To ensure you don't end up like the stick-man in the warning signs, the safe way is to book onto a tour, such as those organised by the Desert Cave Hotel.

For more information, contact the Coober Pedy visitor information centre in Hutchison Street (00 61 8 8672 5298; www.opalcapitaloftheworld.com.au)