Nether, used for the Glastonbury Festival in 2014. How did Donwood get his first Radiohead commission? Yorke rang Donwood to offer him the job of coming up with Radiohead's cover artwork for My Iron Lung after being less than happy with the cover for the band's first album, Pablo Honey. Donwood didn't like it either. "A baby's face with goggly eyes surrounded by 100s and 1000s - what the f--- has that got to do with Radiohead?" Where does the title The Panic Office come from? It comes from a track on Radiohead's OK Computer album, Fitter, Happier, which Donwood helped create. While the band recorded the album, he was working on some short stories. "We had a great big computer that cost about 7000 quid with a huge TV monitor, everything was massive and beige, before Apple got cool." Donwood was experimenting with a program called Simple Text, with a text to speech function. "So I could write my stories in and get a voice to read them, like Stephen Hawking's voice. It's called Fred. So when we were recording, I was mucking around with that, and Thom said 'can you do something with all these words?' and he gave me this thing he'd written and I started editing and cutting and rearranging it and that became the track Fitter, Happier ... we used Fred."

The band's second album after Pablo Honey, crash-test dummy artwork by Donwood. What happened to Fred? He returns for The Panic Office as part of Yorke's soundscape. Sadly, Fred is neither fitter nor happier. "He hasn't taken his own advice, he's become cynical and disillusioned," Donwood says. Artwork for OK Computer, Radiohead's third album. The soundscape is based on a previous work, Subterranea, created by Yorke for another Donwood installation in 2011, Mithras Tauroctonos Subterranea, a labyrinth in an underground train station in London

"Thom has done a new version of Subterranea, Part Two," Donwood says. It is based on field recordings taken over 24 hours in a Dorset holloway, a sunken pathway with trees arching in a tunnel overhead that has become a recurring theme in Donwood's art. "So there's lots of bird song and distant sound, but if you give sound files to Thom he will do things to them. So he has done unspeakable things to the lovely mellifluous sounds of an English country day. Now it sounds really quite menacing." Cover created using wax and syringes. Three different tracks play simultaneously, one from sub-base woofers as visitors enter the space - "you'll hear a very low sound at first" - one from mid-range speakers, and one from top-range speakers suspended from the ceiling. "So once you're right inside in the middle you'll get the whole thing." The soundscape also constantly shifts during the Sydney installation's 18 days on display, as the three tracks are played on random shuffle. "Mathematically if you have three things and you play them together at different times, the number of permutations is enormous," Donwood says. "So anyone who comes in at a different time will hear a different permutation of Subterranea Version Two." Cnut artwork on Thom Yorke's solo album The Eraser.

Where did Donwood grow up? In Colchester in Essex in the 1980s, "which was not a great place to be". Residential Nemesis by Stanley Donwood. What was he like as a kid? Donwood has three sisters and a younger brother Adam, who moved to Australia 17 years ago and lives on Sydney's northern beaches. As kids, he and Adam used to produce a comic book. As Adam recalls it, his brother sacked him from writing duties because his plots weren't funny enough.

What other jobs has he had? Donwood started off with a paper round, then washed dishes in a restaurant, worked on a farm and assisted a tree surgeon. For a while he thought that's what he wanted to be and moved to Cornwall to try and get a job in forestry. The week he arrived, the forestry company laid off half its workforce. "So I ended up living in a bedsit in the city instead and painting buildings." How does he come up with the covers? When Radiohead records a new album, Donwood spends a lot of time sitting in the studio listening to the recording process. "I'm not musical so I don't really understand what's going on. It sounds to me like they're playing the same bit of music again and again and again for several days but they're not, they're testing it, so I hear quite a lot and sometimes everyone just sits down and listens to what there is and that's quite good... I find their music is very visual." Often his original ideas for each record change completely, or it can take time to figure out the right thing to do. "Honestly, it's happened on almost every record - three months of flailing around because the music takes some time to assemble itself." Is he the sixth member of Radiohead?

No he's not, and neither is the band's long-time producer Nigel Godrich. Radiohead has - count them - five members. What's the deal with the bear? Donwood's emblem is his pointy-toothed cartoon bear, which has its own shrine in The Panic Office. He first drew the bear nearly 20 years ago, inventing it for his eldest daughter when she was very young and waking up very early, demanding to be entertained. "I was telling her stories and used to draw pictures in a half-asleep, five-in-the-morning way, and this was a story about growing up. It was about how these children had all these toys and loved all their toys very, very much but then they grew up and they put all their toys up in the attic and became very boring grown ups, and while they were becoming boring adults, their toys were becoming more and more angry up in the attic about being neglected." He begins drawing. "So these teddy bears start out as lovely little creatures. You've got to imagine it's five in the morning, very tired, oh my god, so I'm going to draw a teddy bear, not very good one, here it is, it's got lovely big eyes like teddy bears have, it's a bit stupid, like teddy bears are, with eyes pointing the wrong way, and a little teddy bear nose, it's flying, not really thinking of much." Donwood then draws his angry bear with its sharp-toothed grin. "The grown ups are having a dinner party with all their grown up friends, they're all very boring, so the bears come down and eat them. And that's it." How did he come up with the cover for the first Radiohead album, The Bends? "I was very interested in refilming quite bad video footage and taking photographs from a TV monitor of the footage and putting that into a computer and degrading it further," Donwood says. He got the original image by smuggling an old video camera into a hospital (where filming is prohibited due to privacy reasons) to video a crash test dummy.

What are the blobs on In Rainbows? For the recording of the album, Donwood and the band were based at a derelict stately home in the middle of a huge forest in southern England. His original idea was formed by reading a series of books about peak oil and the imminent downfall of our petrochemical-dependent civilisation. The huge old house was place was haunted by "at least two ghosts", including one small boy who had fallen to his death from the huge central staircase onto a marble floor. "It was uninhabitable, the band were living in caravans outside and I was in a teepee," Donwood says. "There was a really frightening, massive cellar complex that we were too scared to go down into, and three floors above it with baths full of dead flies and birds, just death, and I'd just read these immensely cheering books on the end of the world, so I was working on really depressing artwork." This included large works based on out-of-town supermarkets and technical drawings of carparks, but then he listened to the music. "It was amazingly beautiful and sensual and organic, and I was completely barking up the wrong tree." Next he had an accident. Working in what used to be the old school room, he had lit it with large church candles. After spending hours on one drawing, he knocked a candle over, and wax went everywhere. "I had the moment of 'Shit!' But then it was 'Ah!'" The In Rainbows cover was created using molten wax and hypodermic needles. "If you have a hypodermic syringe and fill it up with ink, you can draw with it. You just have to push down very gently and the needle is so sharp it scratches on the paper and you get these sudden spurts and bubbles. I was trying to draw as if I'd been injured so it was very jerky, so you have this wet ink and then I'd pour molten wax over it and it had this beautiful translucent quality. It gave this sort of parallax error effect, the image on the paper would be lifted up to the top of the wax... That one accident was the thing that kept going through the whole record." I hear he paints with gold?

Since 2011, to mark the winter solstice each year Donwood buys 23.5 carat gold powder from L. Cornelissan & Son in London, mixes it with varnish and uses it to create artworks in a limited edition of 24. This year's screen print, Golden Solstice Smeuse, had 11 layers, six gold and five black, resulting in a golden, misty effect. What's a smeuse when it's at home? Donwood designed the cover for British nature writer Robert Macfarlane's recent book Landmarks. "In it, he has prepared a number of glossaries of words which you would struggle to find in a standard dictionary. They are words from dialect, slang and so on, and describe matters loosely pertaining to the land. For instance, an old Essex dialect term for a kestrel is 'wind-fucker'. An old Sussex word for the gap at the bottom of a hedge made by the regular passage of a small animal is… smeuse." Why did he get to redesign 21 JG Ballard covers? Because the publisher, Fourth Estate, asked him. Donwood is a long-term fan of Ballard's work and had already read most of his books. When he got the commission, he sat down and read the 21 books back to back, which he doesn't recommend. "With Ballard, you're sort of forced to inhabit his world," he says. "So by about half way through I was feeling really quite nihilistic."

It didn't put him off, though. "I still love his writing... It's a very peculiar and particular world he creates, and he's not just writing entertainment, he's actually experimenting on people to see what happens when they read the stuff he's written, so I thought I'd try and make the artwork the same way." He contacted "loads" of university chemistry departments and asked if he could come and do some experiments and bring a photographer. "It was great to put on the goggles and the white coat and blow stuff up." The resulting photographs became the basis of the book covers, with other elements from Donwood's archives layered over them. Does he have any regrets? A big one was not meeting Ballard when he had an opportunity. "I was like 'I couldn't possibly, I wouldn't know what to say, I'd stutter and sound like a dick', so I didn't and a year or two later he was dead."

This experience taught him a lesson. "If you're offered something amazing, just swallow your fear and go and do it." It was part of the reason he decided to do The Panic Office in Sydney. "I thought, I've just got to do it. I should just forget my worries about it and just do it." What worries? Donwood says he goes through "quite a lengthy period of agonising self-doubt" at the beginning of any new project. "So the band say 'We're working on a new record, come and hang out and stuff and start thinking about what it's going to look like', and I think 'Well maybe I've done everything I can ever do, I've just run out, there's nothing left, no more Stanley Donwood work to come', and it's horrible." Despite his successful 25-year career working across a broad range of media and being offered far more work than he can take on, this worry has not diminished. "You'd think with experience - it's happened before, like every time - I'd expect it, but I don't. I often go off to the painting studio and come back and talk to my girlfriend and go 'Oh my god...' and she's like 'Look, this happens to you every single time, shut up, it will be fine, for god's sake stop going on about it!' And she's right." What's his latest book Humor like?

This is what the book blurb says: "The publisher of this book wishes me to vouch for the writer of this book who is a friend of mine in order to utilise whatever kudos the writer of this quote, ie me, has left in order to advance sales of this book. This has been duly done now in the form of this quote. I am sure the book is very good though I cannot remember what it is called or whether I have read it. I've read lots of his stuff and it's always good and I am in no way biased. Thom Yorke, middle-aged father of two" Tell me about a rock 'n' roll moment. At the 2002 Grammys, Donwood and Yorke won the award for Best Recording Packaging for the special limited edition of Amnesiac in the form of an illustrated hardback book by the artist and the lead singer (going under the name Tchocky). After accepting the gong, they got lost backstage and ended up being searched by security guards who refused to believe who they were.

What's inside the suit? Donwood wore a bespoke suit to the opening of his Sydney retrospective, in grey corduroy with red felt elbow patches and collar detail made by a tailor in Bath. The jacket lining, printed on silk, is his artwork Nether, a hyper-coloured vision of a holloway that was used for last year's Glastonbury Festival. What happens to the Sydney installation when it closes? The Panic Office will be carefully dismantled and Semi-Permanent is exploring options for it to travel to San Francisco, New York, Tokyo, Mumbai and Seoul. Loading

The Panic Office is at Carriageworks daily until June 6, 10am-6pm, free entry. You can find more about Stanley Donwood and buy his stuff at slowlydownward.com. *OK, 20 things