Volcanoes, Glaciers and, Yes, Hostels in Iceland : Package deals make North Atlantic country’s wonders more affordable.

Iceland is so expensive that breakfast this summer at a youth hostel costs $17.

The island is covered in geysers, glaciers, waterfalls and more than 100 volcanoes. Some of Iceland’s landscape provide such a moon-like setting that it was once used as a training area for American astronauts. More than 700 hot springs provide heating to the majority of homes, and although the name conjures up images of frigid temperatures, the Gulf Stream keeps the average temperature in January more like New York City than the Arctic.

Many budget travelers wind up in Iceland on stopovers when flying Icelandair from New York, Baltimore or Orlando, Fla., to Luxembourg. In summer it is also possible to take a passenger ferry from Denmark, Norway, the Shetland Islands or the Faroe Islands.

Iceland has 24 hostels affiliated with Hostelling International. Accommodation is $20 per night for members of Hostelling International and $24 for non-members. The hostels have cooking facilities that guests can use to prepare meals.

Visitors are provided with a free hostel handbook, which also includes a listing of schoolhouses that provide sleeping-bag accommodation in summer.

At the youth hostel in Reykjavik, the world’s northernmost capital, a travel service offers visitors a variety of packages for independent and group travel, including bus or walking tours with backpacker accommodation.

For example, the Hostelling Around I package offers a pass for round-the-island bus travel plus vouchers for seven nights’ hostel-style accommodation for $350. You can stop where you want for as long as you want. You can begin any day until Aug. 31.

Hostelling Around II offers an Omni-Bus Pass for travel in any direction on any long-distance bus in Iceland, plus vouchers for seven nights of hostel-style accommodation. A one-week package costs $390, two weeks $465, three weeks $560 and a month $605.

A $95 package helps independent travelers make a short visit to the Westman Islands, a group of 15 islands created by submarine volcanic activity off Iceland’s south shore. The most recent addition is the island of Surtsey, which emerged from the ocean’s depths between 1963 and 1967.

These islands are the summer home of millions of birds. Heimaey, the only inhabited island and the location of Iceland’s largest fishing port, offers hostel accommodations. The package combines bus and ferry service to Heimaey plus a night’s stay. This package is available year-round.

Heimaey has been called the modern Pompeii. In 1973, all 5,000 residents were evacuated in a single night when volcanic lava and ash poured down on the village. Four hundred of the 1,200 homes were buried; you can still see some buildings half-covered in hardened lava.

For further information on these and similar packages, contact the Iceland Youth Hostel Association, c/o Reykjavik Youth Hostel, Sund- laugavegur 34, 121 Reykjavik, Iceland; from U.S. phones 011-354-1- 38110, fax 011-354-1-679201.

For further information on Iceland, contact the Iceland Tourist Board, 655 Third Ave., New York, N.Y. 10017; tel. (212) 949-2333.

Additional information on student-style travel in Iceland is covered in a 12-page chapter in “Let’s Go: Europe” by Harvard Student Agencies ($17.95).

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The city of Stuttgart, Germany, has reopened its low-cost international youth camp this summer.

International Stuttgart Camp will be open until Sept. 6, 5 p.m.-9 a.m. daily. Travelers 16 to 27 can stay up to three nights for $4.50 per person nightly.

The camp, which provides lodgings in futuristic wood-frame structures, can accommodate up to 200 per night. Travelers should bring their own sleeping bags; blankets and insulating mats are provided. The camp has washrooms, showers, a cafeteria and cooking facilities. It is located in the Feuerbach district, about 15 minutes from the central rail station via suburban railway U6 or tram line 16.

Reservations are not accepted. For information, write: International Stuttgart Camp, Wiener Strasse, 7000 Stuttgart 30, Germany.

In another German city, Nurnberg (in the heart of Bavaria’s Franconia region), a hotel geared to travelers under 27 opened two years ago. This summer the Jugend (Youth) Economy Hotel is offering single rooms for about $26.50 per night and bunk-bed doubles for $15.50 per person, per night.

The Jugend Economy Hotel is located at Gostenhofer Haupt- strasse 47-49, 8500 Nurnberg 70, Germany; local phone 911-92620.

For further information on budget travel in Germany, or for free maps which include lists of Germany’s 700 youth hostels or 700 campsites, contact the German National Tourist Office, 11766 Wilshire Blvd., Suite 750, Los Angeles 90025; (310) 575-9799.