Alaa al Aswany, the Arab world's bestselling novelist, swallows the last of his morning coffee, and throws back his boulder-like head in a gesture that comes close to, but is not quite, contentment. He is longing for a cigarette, too, only today he is not at home in Cairo, where he can happily smoke himself to death if he so chooses (the Egyptians puff their way through 19 million cigarettes every day) but in the quiet confines of the Gore hotel, Kensington; it will be a while longer before he can scoot out to the pavement and light up.

Still, he is not complaining. As cities go, London is not bad. "I have feelings about cities," he says in his wonderful, solemn English. "The kind of feelings a man has towards ladies. Some I love, and some ... not." London is one of those Aswany loves, though it cannot, in his view, touch Cairo or even Alexandria. "Ah! I cannot be objective about Egypt. It is only in Egypt that I feel myself. When I'm abroad, I'm someone who has much in common with myself, but it's not really me. I am always homesick!"

As a dentistry student in Chicago three decades ago, he hugely admired America's efficiency. But it was not, in the long run, for him. "Everything is systemised, practical. Egypt is the opposite, but there is beauty in that. To me, it's the most wonderful place on earth."

Aswany is in London to promote his new book, Friendly Fire, a collection of stories, and a controversial novella, The Isam Abd el-Ati Papers, which was banned in Egypt for a decade but now finds itself enjoying a new lease of life thanks to publishers who look at his back catalogue as a handy means of sating readers' appetites until the next novel. Aswany endured years of rejection at the hands of the General Egyptian Book Organisation (Gebo), the powerful state-run publisher, and The Isam Abd el-Ati Papers, which tells the story of an educated young man who is infatuated by the west but crushed by the tyranny and corruption of the Egyptian state, was one such rejection. He was told in no uncertain terms that the novella insulted Egypt and would never be published unless he removed its first two chapters. At which point he snatched up his manuscript and left the building. He has not been back since.

In 2002, his novel The Yacoubian Building, about the disparate inhabitants of a faded art deco apartment block in downtown Cairo, was quietly accepted by a small, independent publisher in Cairo. Its first edition sold out in four weeks and it was the Arab world's bestseller for five successive years, selling 250,000 copies in a region where print runs rarely exceed 3,000. Word spread. It was made into a hit film by Marwan Hamed, and a TV serial, and has since been translated into 27 languages; 75,000 copies of the British edition have been sold. His next novel, Chicago, did even better, and ... presto! As he writes in the introduction to Friendly Fire: "[Suddenly] publishers started pressuring me to give them anything I'd written."

Those who loved The Yacoubian Building and Chicago, with their extravagant cast lists and their sweeping, soapy plots, should not come to Friendly Fire expecting more of the same. These stories are very different, for all that they, too, hum with the anger and frustration that Aswany has made his own (he will never just let his beloved characters get what they want). It's like turning from David Lodge to Chekhov (though if this sounds like I think this book is the best of the three, that would be very wrong: I adore Lodge; I adore Aswany, especially when he is in full-on campus mode; I cannot wait for his next big novel).

He grins, delighted at the mention of Chekhov. "The short story is a moment of enlightenment," he says. "A moment of vision. The story is going to fall on my head like an apple. But the novel ... there is a school of thought, and I agree with it, that we do not invent novels; we discover them. The novel exists in my heart and in my mind and I must concentrate to get it out. This is not the case with the story. I could get an idea for a story now, while I am looking at your face."

So is he working on one of these longer acts of excavation right now? "Of course! I cannot stop! Always a novel. I love people and literature is a wonderful way to express that love. Their suffering motivates me."

Aswany takes his success in his stride and with a hefty pinch of salt. On the one hand, he cannot resist showing me a photograph of his face on huge posters in the Paris metro, and it is, of course, a great feat to be able to make any money at all as a writer in a country where copyright laws are flimsier than tissue and where publishers rarely give their authors their due (Arab royalties for The Yacoubian Building have, he estimates, just about covered his bill for coffee and cigarettes). But, on the other, he is not about to give up the day job - dentistry - quite yet.

"Society is a living organism and you must keep up. That's why I still practise, though for only two days a week. I will never close the clinic. The clinic is my window. I open it to see what is happening in the street. You can't get disconnected from the street, as a writer; that's a common mistake. You can be too easily welcomed every night by the richest people and the most influential. It is very dangerous because it is that relationship with the street that made you successful in the first place."

Is he now a celebrity in Egypt? "I am very ... appreciated. But the word 'famous' means that people recognise you, but you don't recognise them. I don't think this is a big deal. Many people are famous and they did nothing. Appreciation is the reward, not fame. If I could have 10,000 readers who really appreciate me, or one million who recognise my face, I'm going to pick the 10,000."

In Egypt, however, fame must have its uses. Aswany has long been a well-known opponent of President Mubarak. He writes newspaper columns criticising the regime and is a member of the Kifaya (Enough) movement. So what is the establishment's attitude to him now he is celebrated the world over? "I don't expect them to love me. I am a member of some groups that call for the end of this regime. I know many officials in the government who like my work on a personal level, but... when it comes to award ceremonies, sometimes they attend, sometimes not. Sometimes they call, tell me that they appreciate my work personally but that they cannot attend officially."

Has fame made him safer? "I cannot compare what has happened to me with what has happened to some of my friends and comrades who have been tortured and beaten. What has happened to me - banning me from attending the premiere of The Yacoubian Building - is negligible in comparison. But, in any case, writing and fear are absolutely contradictory. Writing is an expression against fear."

He remains convinced that democracy is coming to Egypt and that the rest of the Arab world will then use it as a model. "I am telling you, it is not far away. I can't tell you a particular date but we are prepared. Our lawyers and doctors are as great in number as the populations of some Arab countries. In the west, there are 180,000 Egyptians with PhDs."

But how can he be so sure? To an outsider, Mubarak looks more nervous of democracy than ever; Egypt's notorious prisons grow ever more crowded with his opponents. "I've read the history of Egypt very carefully. Don't be taken in by the way Egyptians look. It is not always significant. Before the 1919 revolution, we were occupied by the British. Our leader was sent into exile. I have read the [contemporaneous] reports of the British embassy and they say that they do not expect the Egyptian people to react to this at all. Yet the next day, the most important revolution in Middle East history took place!

"Now there are more and more protests in the street. Everyone is on strike. There is real pressure, you can feel it. You cannot deny it, even if you're from the government."

But democracy could be a double-edged sword. Won't many people vote for Islamist parties? He smiles. "I can predict this question!" But does he fear this? "Not at all. I have a real commitment to democracy. I'm not using it for political reasons and if I believe in it, I must respect the people's choice. If they choose Islamists, I am not going to be the happiest man on earth but I'm going to respect it." He believes that, ultimately, the bigger, more important, struggle may not be between autocracy and democracy, but between Egypt's traditionally more tolerant interpretation of Islam and the more extreme Wahhabi view which was imported to the country in the 1980s from Saudi Arabia.

For all his attachment to dentistry, Aswany was always destined to be a writer. Born in Cairo in 1957, his father, Abbas, was also a novelist, the recipient of the state award for literature in 1972, "when it was still respected", according to his son. "I was lucky. He was very liberal. He was my first professor of literature. He told me what to read and what not to read." Aswany had a traditional French education and then went to Chicago to study for his degree. The idea of staying on was tempting, but "I had to come back for my people, for literature".

So in the early hours of the morning, he would write and then he would walk to his practice and remove his patients' wisdom teeth. Did he, in the years when Gebo kept rejecting his work, come close to giving up? "I got very upset. I said to my wife [they have two daughters; he also has a son by his first marriage], 'That's enough. We must leave. I was planning to move to New Zealand. That was in 1998. But a dear friend of mine said, 'This will be the end for you.' So I tried one last novel."

His father was from Aswan, in the south, where people are supposed to be more uncompromising, courageous and proud, so perhaps his Aswan genes saw him through. Also his wife, who reads his first drafts. "I give her all credit. She is wonderful."

At least part of Aswany's international success is down to the fact that his novels, which embrace every stratum of Egyptian society from newspaper editor to manservant, and which reveal these characters' most shameful and most secret desires, have given us, as the New York Times put it, "an amazing glimpse" into a society which many knew little about. (At the peak of its success, The Yacoubian Building, in which a doorman's son, rejected by the police academy, falls in with extremists and dies pursuing jihad, was said to be on the bedside table of President Bush's adviser Karen Hughes).

But Aswany hates to be thought of as an Arab writer. "I'm against presenting literature on an ethnic basis. I am pushed, little by little, to be an Arab writer, but

I prefer to think of myself as part of the republic of literature. The 'now' topics are not so important. The human topics are the important ones; that's why we read Dostoevsky. I am very interested in the Taliban, in knowing how stupid they are. But I'm not going to learn much from a terrible 700-page novel about them.

I might as well go to the internet and type in 'Taliban'. To paraphrase [Gabriel] García Márquez, a good subject does not make a good novel, but a good novel makes any subject seem interesting."

And as in literature, so out in the world. Aswany cannot see the "war on terror" in terms of east and west or even ideology.

"I see this conflict as being between the majority of human beings and the interests of some groups who are not human at all. Most people are on the human side. They want to work, they want life to be better for their children. Some are artists and thinkers. On the non-human side, you find the big corporations, George Bush and fanatics like Osama bin Laden. I think human values will overcome in the end. That's why we are here, after all these centuries. Bush, bin Laden: they have no vision; they see the world through a pinhole. The rest of us, we have a better view. So I'm optimistic."

Perhaps I look sceptical because he adds, with a pacifying smile: "Look! My books deal with topics that would make any fanatic unhappy and I've been a bestselling author for years!" He slaps his thighs delightedly, though whether this is a sign that he considers he has won the argument, or merely that he has earned himself a well-deserved cigarette break, I would not like to say.

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Man from Cairo: A life in brief

Born 26 May 1957 in Cairo, Egypt, the only child of well-known novelist and lawyer Abbas El Aswany. Attends the Lycée Francais in Cairo. From a young age he is keen to be a novelist but, believing writing won't make him any money, studies dentistry at Cairo University. In 1985 moves to America to do a dentistry degree at the University of Illinois in Chicago. Now runs a dental practice in Cairo, where he lives with his second wife and three children.

Literary career

2002 Publishes The Yacoubian Building. For five successive years it is the Arab world's bestselling novel.

2007 The Yacoubian Building is made into a hit film and TV serial and the novel is released in Britain. Chicago, Aswany's second novel, topples his debut off the bestseller list.

2009 Short story collection, Friendly Fire, and a controversial novella published inthe UK.

Don't give up ... Writers with day jobs

Anthony Trollope (1815-1882) was a post office inspector while he wrote several of his best-known novels, including Barchester Towers (1857).

Kenneth Grahame (1859-1932) rose to be company secretary at the Bank of England while publishing several works of fiction, before retiring the year Wind in the Willows was published, 1908.

Franz Kafka (1883-1924) worked in insurance while writing fiction, including Metamorphosis (1912).

John Mortimer (1923-2009), barrister, wrote about his work in the Rumpole books as well as other novels.

TS Eliot (1888-1965) worked as a banker while he published his first four collections of poetry, leaving the job in 1925.

Bernard Schlink (b 1944), a law professor and judge, is author of nine novels, including The Reader (1995).

Vikas Swarup (b 1963) is India's deputy high commissioner in South Africa and author of two novels including Q&A, which was filmed as Slumdog Millionaire.