When DJ Taylor started out as an author in the mid 1980s he remembers being strongly advised that "the one thing you must never do in a literary career is to write books in different genres. 'Never be a novelist and a critic,' I was told. 'Never be a novelist and a biographer.' It's actually very good advice and 30 years ago I indeed set out with every intention of just being a novelist. But then I got diverted …"

Taylor's diversions came quickly and soon assumed the dimensions of other people's entire careers. Following his 1986 debut novel, Great Eastern Land, he became a novelist/critic with the publication of the iconoclastic A Vain Conceit: British Fiction in the 1980s in which he took potshots at the London literary establishment, as only a 29-year-old can. Soon after this he was a novelist/biographer, with a comprehensive life of Thackeray and a Whitbread prize-winning biography of Orwell. Studies of the postwar novel, of the Corinthian spirit in sport, of the Bright Young People of 1920s London would all come along in due course.

Not that this stream of non-fiction has distracted him from the novels. Derby Day, a Victorian thriller set in the world depicted by Frith's 1858 painting of the scene on Epsom downs, was longlisted for the 2011 Man Booker prize. His English Settlement (1996) won a prize in Italy and the paperback of his 2001 novel The Comedy Man is surely unique in literary history in featuring praise from the unlikely pairing of Hilary Mantel and Bob Monkhouse. He publishes his 12th work of fiction – and 20th book in all – next month. The Windsor Faction is a counterfactual history set during the late 30s appeasement period, with the twist being that Edward VIII is still on the throne due to the unexpected death of Mrs Simpson.

But what is really remarkable about Taylor's career is that his productivity as a novelist has not been affected by either his non-fiction work or his Stakhanovite capacity for producing literary journalism. In the last 30 years barely a week has gone by without a review, feature or column appearing somewhere either under his name, or anonymously as in his acerbic reviews and cruelly acute parodies in Private Eye.

"There cannot be more than 10 or a dozen serious literary novelists who make a living from their books alone," he explains. "Virtually everyone else, and I don't blame them in the slightest, has to teach at universities or teach creative writing to earn a living. But having wasted a lot of time working in the City when I was younger, I don't ever want to be institutionalised again. So rather than teach, I do journalism to pay my way and I'm actually rather proud of never having taken the academic shilling."

And in the best traditions of the frugal and resourceful freelance, he has become adept at making the best use of the material that comes his way. "I sometimes used to think what was the point of reviewing some obscure book, but it's amazing how much stuff clicks in at a later date. So it was good that I spent time reading Beverley Nichols's biography" – the vainglorious 1930s poet, gardening writer and composer crops up in The Windsor Faction – "just as I could make use of the things I learned about Edward VIII from my Bright Young People book."

But there is also a personal aspect to his new novel. "My father, whom I greatly admired, was in the second world war and it was the great symbolic thing that hung over my childhood. In the attic we had these Nazi flags that he'd nicked from town halls on his way through Europe and, while he told war stories humorously, you realised that they weren't really humorous at all. And he couldn't help it, but he just didn't like Germans, which in retrospect resulted in some hilarious episodes such as when the parents of my sister's German pen friend came to visit and the name of a German town came up, to which my father raised an eyebrow. They politely asked had he ever visited. 'Yes', he said, '5 May, 1945', and then he went back to reading his paper."

David Taylor was born in Norwich in 1960 and lives there now with his wife, the novelist Rachel Hore, and their three sons. Apart from a gap in the early 1980s, a member of his family has been employed by the Norwich Union since 1920. ("Changing the name to Aviva went down incredibly badly round here.") He followed his father – "the archetypal scholarship boy" – to Norwich school, where his own sons also went, but then bucked the family trend by leaving Norwich for Oxford University, where his history optional thesis was the early church in East Anglia 570 to 870 AD. "It contained every known fact and was still only 19 pages long." But, characteristically, his knowledge of the period was later used in his debut novel, in the form of mentions of the ancient kings Wehha and Wuffa.

His first ambition was publishing. "But there was a disastrous interview at which I gave them my fine ideas about literature and they talked about the bottom line. However, my account of it did become my first piece of proper journalism when the Spectator pulled it out of the slush pile and printed it." He eventually worked in corporate communications for large City accounting firms and for 15 years combined writing novels, criticism and journalism while also holding down a day job. "I could essentially do a week's work in a day and a half which left me time for my writing. But then City culture began to change and there was less leeway. Being on call about a company report at the same time as reviewing the new Salman Rushdie became difficult. But being a neurotic, lower middle-class provincial I was always terribly cautious and so I didn't actually give it up until 1997. But as soon as I left I made up the money in extra freelance work and I look back and kick myself for being so prudent."

His freelance career started well, with a commission to write a biography to mark the Orwell centenary. It won the 2003 Whitbread prize, and while he was "a little late for the real largesse that was swirling round the industry in the late 80s", he picked up one of the last large advances for a biography. "I do think there are historical, as well as commercial, reasons for advances dropping. This was the last generation that could be really written about biographically. Orwell, Waugh, Powell fought in wars. They travelled. They did things. There was so much to write about Graham Greene that Norman Sherry could fill three volumes. With all respect, what has Martin Amis actually done that merits a biography, as opposed to a critical study? And it's getting worse. A writer now is born, goes to school, gets a degree, and then becomes a creative writing professor."

Although Taylor describes himself as of the left, it was at the rightwing Spectator that he found an early berth in literary London. "At Oxford Keith Thomas used to call himself a 'vote with the left, dine with the right sort of person'. I used to laugh at that, but the old Etonians at the Spectator were far more welcoming than people whose politics I had more in common with at the New Statesman." Other regular work came at the newly founded Independent and at Private Eye, where for the last 15 years he has written anonymous literary parodies, although they have been collected and published in book form under his name.

"As time went on there were some books that were crying out to be mocked rather than just reviewed, but I would also argue that they are not malicious or mean-spirited. They are meant to be funny, yes, but you have to have made some kind of impression on the world to be parodied, and so it is also a form of cultural authentication."

He admits that his early reviewing style could be crudely summed up as "Margaret Drabble? 'Whatever!' Kingsley Amis? 'Get out of here!' … And then you do think what it must be like for those people to read such things, so one does mellow." He has also received his share of criticism, not least due to The Vain Conceit, "which essentially said that the modern English novel is crap. If you start so young making pronouncements about fiction then people will quite rightly come and jump on you hard when you write your own."

He now characterises his own first five novels as "essentially the same book. Written in the here and now and all about someone, very much like me, who was brought up in a small place, has to go to a big place to do what he wants to do, and then goes back to the small place where he realises that he's changed and it's changed and he goes on living uncomfortably on a sort of pontoon bridge between the two."

But after the success of the Orwell biography he moved to historical fiction and immediately sales and reviews improved, leading to the Booker longlisting of Derby Day. "It was a great surprise as I always fancy I know the type of book that Booker judges go for, but I also know what a lottery it is." Taylor was the only dissenting judge to DBC Pierre's victory in 2003 with Vernon God Little. "After the longlisting stage it was obvious it was going to win. They'd reserved two and half hours for the final meeting and it took five minutes with me forlornly saying, 'you can't do this, just stand back people'. The rest of the time was spent talking about the existence, or nonexistence, of God with Anthony Grayling, which didn't make things any more relaxing."

He says his novels are now moving forward in time, with The Windsor Faction set in 1939 and a 1970s novel featuring a paranoid Harold Wilson close to completion. He then plans an "enormous non-fiction book, which will not earn me much money, but I've always wanted to write, about English literary culture in the last century. How books are conceived, written, printed, published, reviewed, sold and read." He describes it as a "continuation and homage" to John Gross's magisterial The Rise and Fall of the Man of Letters. "And it will end with digital culture and me asking whether there will still be book reviews in the future. The answer is of course there will and I suppose ultimately this book will be a defence of the person I am, the freelance writer and the culture that I work in. I started off wanting to be a novelist and that's what I still want to do, but criticism and biography and journalism have played a part in the novels themselves, and in enabling me to write them. What I've ultimately learned is that you write the books that you write."

• The Windsor Faction, published by Chatto & Windus, is out on Thursday.