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Vogue's Aimee Farrell discovers the Santa Teresa district of Rio de Janeiro during carnival.

It's just after dawn. Dishevelled but happy, I collapse into the back of a yellow taxi. I'm on my way back to my hotel from the Rio carnival, the sound of drumming still pulsing in my ears. The city sparkles under the first light. Despite the time there are people everywhere. Dotted through the crowds, costumed revellers dazzle like disco superheroes. Welcome to the biggest party in the world.

When it comes to the Rio carnival you need a game plan. The official event, with its otherworldly costumes and mile-long parades, takes place in the Sambadrome Marques Sapucai, a specially constructed arena designed in the 80s by Brazil's most famed architect, Oscar Niemeyer. If you want to join the party, you'll have to buy a ticket in advance. The Sambadrome is one long traffic free street with viewing boxes built-up on either side – like London's Wembley Arena but built in a straight line. It's expensive, but once you're in it's a spectacle like no other.

I caught the penultimate day of the weeklong festivities, watching the carnival highlights in the ‘Parade of the Champions', where all the winning samba schools are on show. Each school's parade lasts for about an hour, and follows a set sequence from Battery - the energetic drum troop whose rhythms fuel festivities – to all the incredible floats. Each float seems bigger, bolder and more intricate than the last. There's a bejewelled Taj Mahal, a giant mansion with walls that fall away to reveal workers busying themselves inside, recreations of the African jungle and the Egyptian pyramids. Then there's the dancing. The glimmering hyper-real bodies of the samba queens are extraordinary. Best of all they're curvaceous, not model-thin.

Happily the Sambadrome is not the only party in Rio. There are plenty of other scaled-down, street-level carnival experiences to be had. The gay parade on Ipanema beach is free and fantastic. And at set times throughout day and night there are block parties, called blocos, all over the city. It's just a case of picking up a guide from the nearest tourist office to find out where and when, and then following the throng. Don't expect bombastic sound systems though; blocos are community financed so equipment can be limited. But what they lack in funds is made up for in force. Buy yourself a caipiroska from the nearest vendor (they're everywhere) and get involved.

Most carnival revellers choose to stay by the Ipanema or Copacabana beaches. My base was the peaceful hilltop enclave of Santa Teresa. It's a lesser-known, leafy and far hipper part of town that's just a twenty-minute drive from downtown Rio. Once the hangout of upper class cariocas - hence all the nineteenth century colonial mansions - the area was left abandoned until it was reclaimed by artisans in the 70s. Quiet cobbled lanes circle the Santa Teresa hill like a helter-skelter, and a streetcar runs through the district to take both tourists and locals to and from the nearby nightlife haven of Lapa.

Santa Teresa is enjoying a revival. In amongst the growing number of independent bars and cafes there are some seriously luxurious places to stay. I chose the Hotel Santa Teresa in the district's historic centre, one of the only hotels in the country to be placed under the Brazilian government's heritage protection plan. It has been beautifully restored, and filled with indigenous art and natural artifacts, but the main draw is still the view. I finally unwind at dawn beside the hotel pool, which looks out over Guanabara Bay, and the Teresópolis Mountains fall away in the distance. The brilliant lights of turquoise favelas flicker on the horizon. It's a unique vantage point onto the still wakeful city.

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