His work looks ever more extraordinary and radical, while his domestic life seems increasingly disturbing. On the opening of a new exhibition of early 20th-century British sculpture, Fiona MacCarthy asks what to do with Eric Gill

When did sculpture in Britain become absolutely modern? Not, as some might claim, with the 1930s abstract work of Henry Moore, but 20 years earlier, in a phase of wild experiment immediately before the first world war.

"Wild Thing" is the title of the autumn exhibition opening next week at the Royal Academy. The title is taken from Ezra Pound's description of the young French sculptor Henri Gaudier-Brzeska padding behind him "like a well-made young wolf or some soft-moving, bright-eyed wild thing". Gaudier-Brzeska is one of three iconoclastic artists chosen by the show's curator, Richard Cork, to demonstrate the strength and daring of the sculpture of the period. The others are Jacob Epstein and Eric Gill. All three had their particular areas of wildness, and their parallels and differences make fascinating viewing. But in terms of moral challenges and sexual complexity, the wildest of the wild things is definitely Gill.

These radical young sculptors sought to escape from the classical tradition. They glorified the primitive, the art of what Gaudier-Brzeska admiringly called the "barbaric peoples of the earth". For Epstein, the Polish Jew from New York, the exotic arts of Africa, Asia and the Oceanic shores provided influences. For Gill, son of a Brighton non-conformist minister, it was India that fired the imagination, especially the sexually explicit Hindu temple carvings. Ellora and Elephanta: these were his magic words. In 1911 he made his own version of the copulating gods, the carving Ecstasy which is in the exhibition, using as his models his sister Gladys and her husband Ernest Laughton. Gill kept his eroticism close to home. His own long incestuous relationship with Gladys seems to have started at around this time.

All three artists were revolutionary in their attitudes to making, pioneers in reviving the medieval practice of "direct carving". The usual method in the early 20th century was first to model the figure in clay, then to have the model cast in plaster, and finally to employ a technician to achieve the full-scale sculpture by means of measuring and pointing machines.

The advantage of direct carving was the total control it gave the sculptor. For Gill, direct carving was part of a whole philosophy of life, a campaign against coyness and adulteration wherever he found it. He would castigate Bird's Custard Powder as a travesty of "custardness", just as he poured scorn on contraception as interfering with the natural pleasures of penetrative sex. These theories culminated in a book-length diatribe against the iniquity of trousers, so concealing of "man's most precious ornament". Gill was a great craftsman, and a love of physicality, a kind of crazy candour, permeates his work.

He developed what became a religion of explicitness, "the making out of stone things seen in the mind". Gill accused Epstein of being "quite mad on sex". If so, Gill himself was even madder, taking to stone carving as the medium for expressing his most secret thoughts and longings. His earliest sculpture, made in 1907, had been a little stone figure of a crouching, naked girl, carried out at a rare period of sexual deprivation when his wife was pregnant with their third daughter, Joanna. A slightly later carving, A Roland for an Oliver (Joie de Vivre), shows a stridently sexual female juxtaposed with a delicate, drooping Christ on the cross. This pair of sculptures, brought together for the RA exhibition, dramatically illustrates Gill's long and sometimes agonising quest to reconcile the sexual and the spiritual.

Gill created his own life in the wilderness. He transported his workshop and his family from Hammersmith to the village of Ditchling in Sussex. Here they lived in deliberate primitivism. Another wonderful example of Gill's carving in the RA exhibition, the pugnacious Hampshire Hog, conjures up the sheer creative vigour of these days of sandal-wearing self-sufficiency. Gill and Epstein, a frequent visitor to Ditchling, photographed one another naked and made ambitious plans to collaborate on carving a 20th-century Stonehenge on the Downs, a gigantic group of godlike human figures celebrating fecundity and virility. Gill's Stonehenge would have included contemporary literary celebrities. William Rothenstein wrote to him excitedly: "Epstein shall carve Shaw nude and you shall make Wells glitter in the light of the sun."

During this early period, Gill was at work on Ecstasy. The title was almost certainly not his. Gill, who was anything but squeamish, refers to the carving in his diary as "They (big) group fucking". He was, however, cautious enough to keep his apprentice on guard outside the workshop door while his sister and her husband were modelling for him. Nor could the carving be exhibited in public. Gill sold it in 1912 to Edward Warren, a local collector who already owned a version of Rodin's equally unexhibitable The Kiss.

Simultaneously, Gill was making a much smaller stone sculpture showing an acrobatic form of intercourse. He inscribed it Votes for Women, since the female figure is on top. In 1911, when Gill had his first, very successful exhibition of sculpture at the Chenil Gallery in Chelsea, this then startlingly explicit sculpture could only be viewed on demand in the back room. Gill sold it to the economist John Maynard Keynes, who paid £5 for it. When his brother asked him what his staff thought of Gill's carving, Keynes answered: "My staff are trained not to believe their eyes." The whereabouts of Votes for Women are now, alas, unknown. Photographs suggest it is one of the most intriguing of his early works and proof of the elasticity of concept that allowed him to veer between such sexually blatant sculptures and the sequence of devout Madonna-and-child carvings that he was also making at the time.

Gill stands out as the great oddity in 20th-century sculpture. In defining modernism there is a clear link between say, Constantin Brancusi and Henry Moore or Barbara Hepworth. But "with Eric Gill we have to deal with a different kind of otherness", his close friend the artist David Jones pointed out. In 1913 Gill became a Roman Catholic, an event he was to look back on as the most crucial of his life. By now he had broken with Epstein. He stood on his own as a Catholic artist in a primarily Anglican country, working almost exclusively for Catholic clients. Artistically, he had resolutely made himself into an outsider, "a stranger in a strange land". His sexual obsessiveness he rationalised into seeing sex as an aspect of God's glory. Gill's most sexually explicit images represented Christ and his holy bride, the church.

There was a sweetness and implicit sense of purpose in the life of the community surrounding Gill at Ditchling. In 1913 the family had moved to the Common, two miles out of Ditchling village. Gradually other craftsmen joined them: a printer, a woodworker, a weaver. Within the next 10 years more than 40 craftsmen, women and children had settled on the Common, living a life of intensive manual labour, building their own homes, rearing their own animals, combating the evil forces of 20th-century commerce, making beautiful things by the work of their own hands.

This was an Arts and Crafts community, but more so, centred on the chapel where at regular intervals during the day the religious office would be said. Gill, his wife and other colleagues formed a lay religious order, the Guild of St Joseph and St Dominic. Gill himself became the first prior and took to wearing the girdle of chastity under his habit. "Much good it did him," said a cynical friend. I first visited the remnants of Gill's community at Ditchling in the 1960s, when I was working for the features department of this newspaper. Though Gill had cut himself adrift from Ditchling in mysterious circumstances in the 1920s, his was still the dominant presence. Loving Gill's work already, I was fascinated by what I found. The article I wrote bore the title "Cranks and Craftsmen". At that stage I was still unaware of the contortions in Gill's arguments for sexual directness and the true complexities of his own domestic life.

I have found, as a biographer, that you do not choose your subjects. It is more that they sit in your mind waiting to claim you. In the late 1980s I started research for a biography of Gill. The majority of his private papers – correspondence, diaries, the account of his sexual history entitled He and She – were sold to the Clark library at the University of Southern California by his wife, Mary, after his death in 1940. She had made an attempt to censor the material, crossing out a few of the more revealing entries, but had evidently given up at an early stage. As well as numerous extramarital affairs, these documents record Gill's incest with his sisters (almost certainly with Angela, the model for Joie de Vivre, as well as Gladys). Also, as is now well known, the diaries give details of incest with his two eldest daughters, Betty and Petra, during the Ditchling years when they were in their teens.

Gill's own life gives admirers of his work a lot to grapple with. While the sexual experiments with his own daughters, meticulously recorded, were taking place, Gill was making his most heartrendingly beautiful images of girlhood. Petra was the model for the sculpture and related wood engraving Girl in Bath, her curtain of long hair half concealing, half displaying her newly nubile body. The way in which perverse sex can produce works of great beauty is an arresting theme in AS Byatt's latest novel, The Children's Book. Her alarming central figure, Benedict Fludd, the potter of great talent who hoards his ceramic figures of his daughters in obscene contorted poses on the shelves of the locked pantry, has clear parallels with Gill.

How did Gill's children respond to their weird upbringing? Petra told me, and repeated in later interviews, that the peculiar isolation of their upbringing on Ditchling Common made his sexual demands seem in no way out of the ordinary. Was this just what fathers did? Both she and her sister Betty appear to have absorbed the experience, making apparently good and happy marriages, bringing up large families. Their history challenges received opinion on the inevitability of damage done by child abuse.

But what of their brother, Gordian? The interview I carried out with him at St Mary Abbot's hospital in London in April 1986 was the most difficult I have ever done, since Gordian, who was brought from an infants' home to live with the Gills as an eight-month-old baby in 1917, had had a severe stroke. He was only partly mobile and he could not speak at all. He could, however, understand my questions and, after a few minutes, I became quite adept at gauging his reactions. As I wrote in my notes, he communicated in "little moaning noises, rising to a higher pitch and greater loudness when he got agitated". He became especially agitated, clenching his fists and screeching, at the mention of Gill.

After the birth of her three daughters, Mary had several miscarriages. Gill still craved a son. The baby boy they fetched from the infants' home in Haywards Heath was rumoured to be the result of a liaison between a Roman Catholic priest – the Dr Flood who later became Gill's chaplain – and an errant nun. Gordian was never legally adopted. His true origins were kept a secret from him. Only when he received his call-up papers for the second world war did he discover that he was not in fact Gill's son.

Love was lavished on him, as it was on all the children. The boy played his part in the scenes of holy domesticity that impressed so many visitors to Ditchling. Watching the Catholic craft family grouped around the dining table, one susceptible visitor reported seeing a nimbus round Gill's head. Gordian was drawn into the intensely sexual Catholic ceremonial of the household. Gill recorded in his diary how he and Mary made love to celebrate Gordian's first communion. He dedicated his book of drawings First Nudes to his son because it had been started on Gordian's ninth birthday in 1926.

The images Gill made of Gordian are full – perhaps over-full? – of fondness. In the carving Foster Father, the child is clasped to the father in an embrace that resembles the male-female conjunction of his contemporary sculpture Divine Lovers. Gill's well-known statue of Prospero and Ariel above the entrance to the BBC's Broadcasting House can also be interpreted as God and the Christ child, Gill and his own beloved son.

For Gill, with his curiously super-charged libido, love could hardly not lead to sexual connection. Sisters, daughters, even the family dog at his later workshop, Pigotts, near High Wycombe, were easily within his reach. He sometimes spoke out against homosexuality but he left records from the 1930s of male sexual "high-jinks". I have recently been wondering, thinking back over the details of that interview, whether Gordian too could have been drawn into the pattern of familial sexual abuse.

Gordian's later history was tragic. Gill had intended him to become a printer. But he had no stamina, drifting from job to job. For a time he was a porter at Asprey's in Bond Street. He drank heavily and, according to members of the family, periodically stole Gill's work and sold it. He was said to have been "in trouble with the police". When Gill left him just £500 in his will, Gordian's bitterness increased.

As years go by, Eric Gill becomes more, not less, unsettling. From today's perspective his work looks even better: his sculpture truly radical; his woodcuts and engravings instantly engaging, with an often astonishing ebullience of line; his lettering clear, confident and hugely influential on the development of modern type design. The world has now caught up with many of Gill's wider views: his fury at the "art nonsense" perpetrated by the fashionable London dealers; his hatred of bad workmanship and luxury and waste. His great carving in Leeds of a raging Christ ejecting the moneylenders from the temple has a wonderful contemporary resonance.

But the more we understand of the prevalence of child abuse, the more reprehensible Gill's personal morality becomes. Just what do we do with Eric Gill? Should we, as has sometimes been suggested, tear down his Stations of the Cross in Westminster Cathedral? Remove Prospero and Ariel from over the doorway of the BBC? Demolish the dozens of beautiful village war memorials that commemorate the fallen of the first world war? Or – better – should we look and look again at the work of an artist who has so much to tell us of the mysteries of human experience?

Wild Thing: Epstein, Gaudier-Brzeska, Gill is at the Royal Academy from 24 October to 24 January. Fiona MacCarthy will give a lecture at the academy, "Saint or Sinner? Reassessing Eric Gill", at 6.30pm on 20 November. Tel: 0844 209 1919.