I'm standing in the Ecuadorean cloud forest, my clothes sodden. It's hard to know if the moisture is fog pouring off the leaves, sweat from the humidity, or rain penetrating the canopy. The cathedral of trees is bathed in a milky mist of cloud. Even the call of a tree frog sounds like droplets of water plopping into a pool.

I'm not surprised to learn that cloud forests also go by the name "elfin forests". This tangled mass of dark, dripping, dancing leaves in the lowlands between the Andes and the coast has a nebulous, fairytale quality. I have travelled here from Amazonia, but that iconic rainforest doesn't much resemble this secret world, apart from the tarantulas and Tarzan-esque creepers. The trees are shorter here, their crowns dense and big enough to intercept water from passing clouds. Their trunks are gnarled and worn. Moss carpets the earth, competing with lichens, ferns, rare orchids and passiflora. Rocky, clear rivers rush past, unlike the sluggish, tannin-black rivers in the Amazon.

Where the Amazon from the air looks like it has been pounded with a giant meat cleaver, the steep gradients in these parts mean you can see for miles. As you can from Mashpi Lodge, a sleek, 22-room retreat that opened this year, a glass-and-steel cocoon perched on the spine of a mountain within a 1300-hectare private reserve. The magical carpet of emerald treetops spreads out before it - when the cloud lifts.

A local spotter, Manolo, who comes from a nearby farm, accompanies my guide, Klaus, and is his eyes and ears in the forest. Klaus's gift is storytelling. He describes the jungle as an environment as tough as a New York investment bank, where plants fight each other to get high, fast, for light and nutrients. In the canopy - so long, suckers! - it's a "penthouse lifestyle", he says. Down on the forest floor, the plant proletariat go head-to-head. Klaus points out armadillo holes, tree iguanas, giant millipedes and the mating calls of male birds. At the mariposario - the butterfly farm - he describes the short but beautiful life of a butterfly as we admire the fluttering giant owl butterflies, their wings etched with the image of an owl's eye.

Ecuador, a mega-diverse country the size of Victoria, has 46 ecosystems. The cloud forest is part of the Choco Bioregion, a vast biodiversity hot spot that runs parallel to the Pacific from Panama to Peru, above which are the Andes.

As little as 2 per cent of this original lowland Ecuadorean Choco remains intact, according to a 2001 report by the Critical Ecosystem Partnership Fund, as swaths have fallen to logging, mining and farming, and as Quito creeps ineluctably outwards - the capital is less than two hours' drive from here. Lodges such as Mashpi are supporting burgeoning ecotourism, which helps to preserve what's left.

Travellers come to see white-fronted capuchin monkeys, red brocket deer, peccaries, cute little kinkajous, the "Jesus Christ lizard" (which walks insouciantly on water) and the three-toed sloth. I miss the sloth that had been lounging in a tree a few days before my arrival. But I admire the toy-like beauty of the toucans, the iridescent brilliance of hummingbirds and the vivaciousness of the tanagers - mustard, lime and aquamarine by turns. About 300 bird species have been recorded in the reserve so far.

The ultra-modern lodge is a strange fruit in a world where other buildings are made of bamboo and thatch. It's not the first eco-lodge in the cloud forest but it is the swankiest, and the only one with a giant jacuzzi. At night, the glass walls are plastered with locusts, moths and cicadas, their shadows lending an ethereal beauty to the hard-edged modernity. Cosseted inside, I am most definitely bug-free, yet still at one with the elements (especially when wallowing in one of the Philippe Starck-designed tubs with a view).

Mashpi's eco intentions are serious. Though it opened this year, the project began in 2001, when the former mayor of Quito, Roque Sevilla, and Metropolitan Touring, of which he is a major stakeholder, acquired the land, a former logging concession.

Mashpi was built without chopping down a single tree, Klaus says, and the property will be expensively powered by hydroelectricity by next year. It employs a resident biologist, Carlos Morochz, who has created an extensive inventory of birds, insects, mammals and reptiles in residence, and whose research helped Mashpi obtain its credentials as a private protected area, and ensure the creation of a wider 17,200-hectare protected area engulfing Mashpi, declared last year. After dinner, Carlos wows guests with a slide show of the puma that wanders the reserve at night, caught on camera.

Most of the produce we savour in the cathedral-like dining room (palm hearts, naranjilla and papayas, coffees, chocolates and plantains) comes from the rainforest that envelops it, produced on farms from the reserve surrounding Mashpi, whose farmers now work together in a mutually sustaining co-operative.

The lodge has also worked on a radical project with the Ecuadorean government, which is keen to increase tourism in mainland Ecuador and preserve its pristine forests. In return for a non-refundable credit of $US1.5 million, an association of employees and local people will become shareholders in 15 per cent of the project. Eighty per cent of the staff will come from the local area once they've been trained. The symbiotic end result is that the community cares about Mashpi and vice versa.

Ambitious future plans for Mashpi are still unfolding. The lodge's owners are working hard to finish an aerial "tram". The virgin forest at its end point would take half a day to reach on foot. It's not ready for me; instead I cycle on a "sky bike" to see the canopy up close. It's a Dali-esque bicycle made for two that Klaus and I pedal across a cable stretching 200 metres in the forest. Fortunately, it's too cloudy to see how far below the forest floor really is.

On my final day, Klaus and I leave the lodge late and visit the hummingbird feeders. As the birds clamour for the nectar, the whizzing of their wings is audible. We turn back at dusk. As night falls, I ask if we can walk without torchlight to see the fireflies and the phosphorescence. So we walk in silence, past the candle-lit home of Jose, one of the guides, listening to the orchestra of frogs and cicadas, until the glowing Tardis of the lodge comes into view.

Lydia Bell travelled courtesy of Abercrombie & Kent.

FAST FACTS

Getting there

LAN has a fare to Quito from Sydney for about $2891 low-season return, including tax. Fly to Santiago (about 16hr, including transit time in Auckland) and then to Quito (about 7hr, including transit time in Guayaquil). See lan.com. Melbourne passengers pay about the same and fly to and from Auckland to connect. Ecuador's currency is the US dollar.

Touring there

Abercrombie & Kent includes a two-night stay at Mashpi as part of its tailor-made tours of Ecuador. The stay costs from $1218 a person, including full board and guiding. See abercrombiekent.com.

More information

See ecuador.travel; quito.com.ec.