Wind-bells tinkle and cypresses sway in the breeze. The sun casts sharp shadows across an undulating landscape. There are strange concrete forms everywhere: giant open vaults, painted half-domes with strange crests, an amphitheatre ringed by buildings with giant circular openings, little houses sunk into the hillside. Healthy-looking, vaguely hippy-ish people, young and old, stride about in dusty jeans and T-shirts. Beyond are the scrub-covered hills of the Sonoran desert. This not your typical American settlement. In fact, it's not your typical Earth settlement. For one thing, there are no cars or roads. Everything is connected by winding footpaths. Nor are there shops, billboards, or any other garish commercial intrusion. It looks like the set of a sci-fi movie designed by Le Corbusier. Round the next corner, you might expect to bump into Luke Skywalker, or Socrates, or a troupe of dancers doing Aquarius.

This is Arcosanti, 70 miles from Phoenix, Arizona. It's a curious taste of what an environmentally friendly US town could look like, but probably never will. It was designed by Paolo Soleri, an Italian-born architect, who originally came to Arizona to work for Frank Lloyd Wright, but soon set off on his own idiosyncratic path. Soleri is a genuine visionary architect. In the early 1970s, his designs and fantastical writings made him a big-hitter in architectural circles, up there with other postwar sci-fi modernists such as Buckminster Fuller. Then he all but disappeared, becoming, for the past 30 years, little more than an obscure curiosity. Yet today, as the world wakes up to the grim realities of climate change, peak oil and sustainability, Soleri's path looks less idiosyncratic. In fact, he's now something of a guru: in demand on the lecture circuit and, recently, offering sage advice in Leonardo DiCaprio's "how can we save the world?" documentary The 11th Hour.

Soleri invented "ecotecture" before the word even existed. In the 1960s, he derived a similar term, "arcology", to describe low-impact, environmentally oriented design. But Soleri's arcology went beyond mere architecture. He developed an entire philosophy of civilisation, laid out in his 1969 book, The City in the Image of Man. It is a wondrous tome, full of lucid rhetoric, almost impenetrable diagrams and spectacular drawings of "arcologies": fantasy cities of the future intricately rendered. Rather than inefficient, land-hungry, low-rise, car-dependent cities (like nearby Phoenix), Soleri's arcologies are dense, compact, car-free, and low-energy. Their gigantic structures leave nature unspoilt and readily accessible. Some are hundreds of metres high, designed to accommodate six million people; others are built on top of dams, or form artificial canyons, or float in the open sea.

Four decades on, Soleri is still happy to expound on the state and the fate of the city. He welcomes me to Arcosanti, then gets straight down to business, explaining what he tried to set up here by first rounding on his old mentor Frank Lloyd Wright for glamorising suburbia. This, says Soleri, actually leads to the breakdown of the city, as what he calls "the hermitage" begins: "Instead of people gathering to develop a culture, they want to escape from other people. Individuals believe they can reach a level of self-sufficiency that can isolate them - or their family - in an ideal place. Then they somehow expect the civilisation that has made them to serve them. It's a parasitic kind of life."

In the 1970s, Soleri's vision of an alternative drew hundreds of student volunteers from all over the world to build Arcosanti, a prototype arcology with a projected population of 5,000. They worked for free in the sweltering heat, sleeping outside and learning from the master - who, judging by the photos, was usually to be found in swimming trunks and a short-sleeved shirt, digging alongside them. "It was not a community for community's sake, eating tofu and giving each other back rubs," says Roger Tomalty, who oversaw construction. "It was the opposite of the hippy scene: a community of construction workers. If you were going to be here, you were going to work - harder than you'd ever worked in your life."

In the 1950s, Soleri built a base in Scottsdale, a desert town that has since been engulfed by Phoenix. He still lives there now. Named Cosanti, it was the prototype for Arcosanti: a complex of experimental, sculptural buildings born of low-energy construction methods such as "earthcasting": build a mound of earth, pour a layer of concrete over it, take away the earth and, hey presto, you've got a dome. Curiously, Soleri's main source of income was not architecture but windbells. Soleri wind-bells, cast from ceramic and bronze, still sell well. The windbell money, combined with lecture circuit cash, meant Soleri could buy the land for Arcosanti outright.

"It was very exciting," says Tomalty. "Paolo was central to everything. He was an unbelievably dynamic speaker. Everywhere he went, his energy was obvious. Through word of mouth, a steady stream of people came. We had to send people away in the end. The kitchen couldn't cook more than 1,000 meals a day." Many of these people are still here. Tomalty's wife, Mary, for example, is Soleri's assistant; there's Carri, who does the guided tours; and Sue, who manages the archive, which contains vast scroll paintings by Soleri, one chronicling the intellectual evolution of mankind. It's 170ft long. Here, too, are sketchbooks, masterplans, essays, photos and press cuttings. One clipping is from the Guardian, recording Soleri's 1973 visit to London. "It may all sound impossibly utopian," the reporter writes of his arcological doctrine, "but at least Soleri is having a try."

Unfortunately, Arcosanti doesn't seem to have got much further since. Only 3% of the original design has been built; the rest doesn't look likely to spring out of the desert any time soon. Arcosanti never quite achieved the critical mass it needed. Its population reached a peak of about 200 in the mid-1970s, but today is lower than 60. That 1970s idealism gave way to 1980s "me generation" priorities and people moved on to "proper jobs", Tomalty says. A regular flow of students still passes through, but they treat it more as a five-week work experience than an open-ended lifestyle experiment.

Soleri has slowed as well. Already in his 50s when he started Arcosanti, he is now 89, still fit and articulate, but that once hypnotic voice is now a hushed murmur, barely audible above the desert wind. "The main fault is me," he says when I ask him why Arcosanti has not been completed. "I don't have the gift of proselytising. For years and years, they responded to me like, 'That crazy guy, what is he doing out there?'"

Inevitably, the real reason for Arcosanti's incomplete state is money. Visionary he might be, but Soleri never seems too bothered with finance. Did he really expect to be able to build a city by selling wind-bells? Soleri laughs. "I was driven by emotions. I never sat down and said, 'What am I going to do now?' I was too busy." But, I ask, is it possible to build a utopia without money?

"Uh-oh," says Mary. Soleri mimes a curtain coming down and a bell chiming, as if the interview has ended. I've said the u-word, clearly in breach of house rules. But wouldn't Soleri describe himself as a utopian? "Oh Jesus!" he says, as if affronted that I've repeated the word. "Utopia is a pretty stupid notion. It says if any group anywhere develops some ideal condition, this condition is legitimate. And I say, 'Forget it!' If you are surrounded by all sorts of demeaning or painful conditions, then 'utopia' is just an arrogant notion that has no room for evolution."

But is Soleri guilty of a little arrogance himself? Utopian or not, his vision was never particularly practicable. Rather than addressing the problems of the existing urban realm, Soleri wants to build a new world, to his masterplan. This was always going to be a challenge, especially with limited cash.

The tragedy is that, judging by the buildings completed at Arcosanti, Soleri was a terrific architect. These are mostly bare-faced concrete, but they incorporate wood, murals, tiles and intricate details that lend them a homely, handbuilt quality, like the best of Le Corbusier's later work. They might have taken a long time to build, but they possess a spatial richness and geometric coherence that most modern boxes lack, both inside and out. And they are exemplary in their incorporation of simple, low-tech environmental principles.

Concrete apses are oriented to capture the heat and light of the low winter sun, yet also provide shade when it is at its highest in summer. And the roads, of course, are relegated to the perimeter. Later phases in Arcosanti's design would have called for 25-storey towers, transforming the village-like settlement into a dense city. They wouldn't be difficult to construct. If this was China, you could probably complete Arcosanti in about a year. But what exists there already is rather compelling - a persuasive alternative to current urbanism. In fact, it could represent the kind of sustainable, low-energy lives we are belatedly coming to realise we should have been living all along.

Rather than a "crazy guy" ranting in the wilderness, Soleri has proved to be a voice of reason. Nobody wanted to hear his diagnosis of the ills of US society, but it has been proved right - the car-centric, inefficient, horizontal suburban model has left us in poor shape to cope with climate-change problems. Yet Soleri is sceptical of new-found admirers of his philosophy. "They take a very shallow understanding of it," he says. In Soleri's view, we need to reformulate, rather than simply reform, our strategy for civilisation. His outlook is not hopeful. "Materialism is, by definition, the antithesis of green," he says. "We have this unstoppable, energetic, self-righteous drive that's innate in us, but which has been reoriented by limitless consumption. Per se, it doesn't have anything evil about it. It's a hindrance. But multiply that hindrance by billions, and you've got catastrophe."

Soleri long ago came to terms with the fact that Arcosanti will not be completed in his lifetime. What will happen after his death is up for debate. Some trustees of the Arcosanti Foundation want to see it completed to his original vision; others think it should be opened up to other architects, or even turned into a health spa to generate revenue. Soleri suggests it could be sold to a university or architectural research organisation. Whatever happens, Soleri's ideas could well be of benefit to future architects, if not as a wholesale solution, then at least as a source of inspiration.

Perhaps Soleri was simply too far ahead of his time. "I've put quite a lot of work into this," he says, looking out over his domain. "But there's no point in sitting and moaning".

· This article was amended on Friday August 29 2008 to correct spelling errors in two names.