(I have searched the archives for this one.. honest)

OK, my VRS started doing this on Tuesday..

Basically I often keep the fan speed on 1, just ticking over, when running the a/c

Noticed the car was starting to mist a little so looked down and the a/c button light had gone out too tho the fan was running ok

But when switching to a higher fan speed the light comes back on and the cool/conditioned air starts blowing...

Any ideas, it does it so neatly that it almost seemed like normal behaviour, but nothing in the owners manual I could see

You have a faulty blower motor resistor. Replace that and all will be OK again.

http://briskoda.net/forums/topic/170338-how-to-change-fabia-fan-speed-resistor/

Pretty sure that's what you need.