In January 1963, Elizabeth Bishop wrote to Robert Lowell from Rio de Janeiro about the stories of Clarice Lispector. "I have translated five of Clarice's stories," she wrote,"all the short ones & one longer one. The New Yorker is interested – I think she needs money, so that would be good, the $ being what it is … but at the moment – just when i was ready to send off the batch, except for one, she has vanished on me – completely – and for about six weeks! … I am mystified … It is 'temperament', maybe, or more likely just the usual 'massive inertia' that one runs into at every turn … in the stories she has awfully good things and they do sound pretty good in English, and I was quite pleased with them."

In June 1963, Bishop wrote again about Lispector: "Clarice has been asked to another literary congress, at the University of Texas, and is being very coy & complicated – but I think is secretly very proud – and is going, of course. I'll help her with her speech. I suppose we are going to be 'friends' – but she's the most non-literary writer I've ever known, and 'never cracks a book' as we used to say. She's never read anything that I can discover – I think she's a 'self-taught' writer, like a primitive painter."

In Bishop's Poems, Prose, and Letters, published by the Library of America, there are three translations from Lispector, including the astonishing story "The Smallest Woman in the World", which has the primitive power that Bishop noted, as well as a real and artful knowingness, a sense of what can be done with tone, with paragraph endings, with dialogue, that could only belong to someone deeply literary. Lispector had, in common with Borges in his fiction, an ability to write as though no one had ever written before, as though the work's originality and freshness arrived in the world quite unexpected, like the egg laid in Lispector's story "A Hen", which Bishop also translated.

The idea of Lispector as fleeting, oddly unreliable, complicated, someone who could vanish, as Bishop would have it, is essential to her work and her reputation. She was born in Ukraine in 1920 but arrived as a child in Brazil. Her background in Ukraine and her Jewish family's escape from there are described in harrowing detail by Benjamin Moser in his brilliant biography Why This World. What Moser calls "her inflexible individuality" made Lispector a subject of fascination to those around her, and to readers, but there was always a sense that she was deeply mystified by the world, and uncomfortable with life itself, as indeed with narrative.

In October 1977, shortly before her death, she published the novella The Hour of the Star in which all her talents and eccentricities merged and folded in a densely self-conscious narrative dealing with the difficulty and odd pleasures of storytelling, and then proceeding, when it could, to tell the story of Macabéa, a woman who, Lispector told an interviewer, "was so poor that all she ate were hot dogs". But she made clear that this was "not the story, though. The story is about a crushed innocence, about an anonymous misery."

The story is also about a woman from the state of Alagoas in the north-east of Brazil – the Lispectors first lived there when they came to the country – who then goes to live in Rio de Janeiro, as Clarice did. In a scene towards the end of the book, the heroine goes to a fortune-teller, Madame Carlota, just as Lispector herself went to a fortune-teller. Lispector told a TV interviewer: "I went to a fortune-teller who told me about all kinds of good things that were about to happen to me, and on the way home in the taxi I thought it'd be really funny if a taxi hit me and ran me over and I died after hearing all those good things."

This is not to suggest that the story is autobiographical; rather it is an exploration of a self that is sometimes glimpsed, but barely known. At the time when Lispector was writing the book, she was herself glimpsed by the writer José Castello on Avenida Copacabana in Rio looking into a shop window. When he greeted her, he wrote, "it takes her a while to turn around. She doesn't move at first, but then, before I dare repeat the greeting, she turns slowly, as if to see where something frightening had come from, and says 'so it's you'. At that moment, horrified, I notice that there is nothing in the shop window but undressed mannequins. But then my silly horror becomes a conclusion: Clarice had a passion for the void."

The self recreated in a form of radical uncertainty is not merely the young woman from the northeast who is, ostensibly, the subject of the novel – the narrator, too, is a self recreated. He is capable of awkward asides, overconfidence in his own method, pure fear in the face of the power and powerlessness of words, then sudden passages of soaring beauty and stark definition. He is capable of a paragraph such as: "Meanwhile the clouds are white and the sky is all blue. Why so much God. Why not a little for men." Or: "Meanwhile – the silent constellations and the space which is time which has nothing to do with her and with us."

The Hour of the Star is like being brought backstage during the performance of a play and allowed odd glimpses of the actors and the audience, and further and more intense glimpses of the mechanics of the theatre – the scene and costume changes, the creation of artifice – with many interruptions by the backstage staff. It is to be told in ironic, maybe mocking, whispers by the box office on the way out that those glimpses were in fact the whole performance, plotted out with care and attention by a writer who is still nervously watching from somewhere close, or somewhere in the distance, who may or may not even exist.

Nothing is stable in the text. The voice of the narrator moves from the darkest wondering about existence and God to almost comic wandering around in his character; he is watching her, entering her mind, listening to her and then standing back. He is filled with pity and sympathy for her case – her poverty, her innocence, her body, how much she does not know and cannot imagine – but he is also alert to the writing of fiction itself as an activity which demands tricks that he, the poor narrator, simply does not possess, or does not find useful. At times, on the other hand, he is in possession of too many of them. It is hard to decide who to feel more sorry for, Macabéa or the narrator, the innocent victim of life, or the highly self-conscious victim of his own failure. The one who knows too little, or the one who knows too much.

The narrative moves from a set of broad strokes about character and scene, with throwaway moments and casual statements which sum up and analyse, to aphorisms about life and death and the mystery of time and God. It moves from a deep awareness about the tragedy of being alive to a sly allowance for the fact that existence is a comedy. The story is set both in a Brazil that is almost too real in the limits it sets on the characters' lives and a Brazil of the mind and the imagination, made vast by the way in which words and images, and shifts of tone and texture, are deployed by Lispector in her mysterious swan song.

As the French critic Hélène Cixous has written, The Hour of the Star "is a text on poverty that is not poor". It has a way of being knowing and mysterious, garrulous and oddly refined. It withholds and it tells too much. It makes sweeping judgments and tiny observations. It is a meditation on two types of powerlessness, each one stark and distinct. The first is the powerlessness of the narrator, someone who has words at his disposal but who feels that words, in all their uncertainty and shiftiness, will dispose of him. He is not sure whether this should make him laugh or cry; instead he remains in an odd, frightened state with strange bursts of pure determination. And then there is the powerlessness of the character he has imagined, or seen, or allowed the words, in all their frailty and foolishness, to conjure up.

But there are times when the narrator forgets himself, as Beckett often does, and finds something too interesting or too grotesquely funny to be bothered about questioning its role in the narrative, its truth or its fictiveness. The memory, for example, that the protagonist had once eaten "fried cat", or the sights and sounds of the street in Rio, or certain memories. Or Macabéa's pronouncement: "I'll miss myself so bad when I die."

Most late work has a spectral beauty, a sense of form and content dancing a slow and skilful waltz with each other. Lispector, on the other hand, as she came to the end of her life, wrote as though her life was beginning, with a sense of a need to stir and shake narrative itself to see where it might take her, as the bewildered and original writer that she was, and us, her bewildered and excited readers.

• The Hour of the Star and other Lispector titles are reissued this month by Penguin Classics.