This is probably the finest beach in the world that Americans are not supposed to visit.

White sands like sugar give way gradually to a gentle, clear sea as warm and comforting as a Jacuzzi. All along the 12-mile isthmus, towering palms sway in the light breeze. Sailboats dot the horizon.Although Varadero is sprinkled with vacation homes of American millionaires of years past, a U.S. embargo has made it - and the rest of communist Cuba - off-limits to American tourists since the early 1960s.

The steadily multiplying luxury hotels are populated mostly by Italians, Spanish, French and Mexicans. And, despite the embargo, more and more Americans.

Although spending money in Cuba is illegal for most U.S. citizens, many are flying to Canada, Mexico or the Bahamas and transferring to planes to Cuba, hopeful that U.S. immigration authorities won't notice the small, generic stamp Cuban authorities sometimes mark on American passports.

Special groups such as journalists, academicians, humanitarians, government officials and Cuban-Americans can obtain a license to travel to Cuba from the U.S. Treasury Department's Office of Foreign Assets Control, but that often takes weeks.

Even with a license, Americans are limited to spending no more than $100 a day on the Caribbean island.

Nonetheless, in 1997 almost 84,000 Americans visited Cuba, including about 18,000 who were there illegally, according to John Kavulich, executive director of the U.S.-Cuba Trade and Economic Council, a private, nonprofit organization based in New York. That was an increase of 19 percent over the year before.

They say the risk is worth it. Two hours east of Havana, Varadero is a world-class resort, with elegant restaurants, lively discos and activities from snorkeling to sky diving, dolphin shows to nature walks.

Of course, the main attraction is the beach. Although the coast is lined with resort hotels, tractors clean the sand every morning and the water remains pristine.

For those wanting isolation, miles of deserted beaches - dotted only by patches of seaweed - line Varadero's nature reserve at the tip of the isthmus. The reserve also offers walks through the low forest and along the salty lagoons.

There are also lots of water activities, although like many other things in Varadero they don't come cheap. Most hotels rent sailboats or catamarans for $15 an hour, while Jet Skis are available at the Hotel Internacional for $5 - per minute!

Some go snorkeling or scuba-diving, but there isn't much to see except a sandy sea floor.

The only 18-hole golf course in Cuba is here, offering a spectacular view of the ocean stretches around the old Dupont Mansion, a vacation home built by the U.S. chemical magnate in 1930. Nine holes cost golfers $40; 18 holes, $60. Many take advantage of a twilight special: $15 course fees for play from 5:30-8 p.m.

A welcome change from the aquariums in theme parks around the world, the dolphin center is located in a natural lagoon, and the seven dolphins there perform three times daily for a $5 entry fee. Those wanting to get closer can swim with the dolphins; $35 gets you 15 minutes.

The hotels themselves offer plenty of activities as well. Most have gorgeous swimming pools where tourists play pick-up games of water volleyball or dance at poolside. Waiters serve tropical drinks on the beaches, where lawn chairs rent for $2 a day.

The hotels are pricey. A double during high-season - late December to mid-April and late July through August - in the resort hotels runs between $100 and $150 a night. But travel agencies, especially in low season, offer air-and-hotel discounts, and several hotels offer all-inclusive packages that are good deals.

Most tourists are content to stay in their hotels, and they won't find much lacking. But those who take time to explore in town will be rewarded.

The town is located on the western end of the isthmus, while the luxury hotels stretch eastward toward the tip. The cheaper hotels are in town, and there is a decent beach, although it doesn't compare to the hotel beaches farther out.

The star attraction in town is Josone Park, 18 acres of manicured gardens surrounding an artificial lake. Couples stroll along the pathways at twilight among ducks, peacocks and iguanas, and dine at the several romantic restaurants, serenaded by musical trios.

Although Varadero probably has more new housing than anywhere else in Cuba, it also is preserving its old. The area has a number of slightly disintegrating architectural treasures from the 1940s and '50s, when Varadero was a playground for rich Americans.

Under restoration is a sandstone mansion overlooking the water reputedly once owned by Chicago gangster Al Capone. Although closed until December, the estate houses a restaurant called "La Casa de Al," or "Al's House."

The Dupont Mansion also houses an exquisite restaurant in a breathtaking setting. Waiters wear tuxedos, and reservations are recommended in high season. Entrees range from $15 to $45.

For nightlife, Varadero is much like many resorts worldwide. The discos are so geared toward foreign tourists that none play more than one or two Cuban songs all night.