Last year's controversy over Graham Swift's Booker prize-winning novel, Last Orders, confounded American readers. Swift's novel - which, in its central plot, gently echoed William Faulkner's As I Lay Dying, and, in its structure, offered a more systematic homage to Faulkner's masterpiece - was denounced as plagiarism. Neither the Booker judges nor most British reviewers had noticed the connection, and, through the media's sleight of hand, their literary lacunae were transformed into Swift's deliberate fault. Allusion, that time-honoured device, was decried as deception.

In the United States, however, such outcry would be unthinkable. Here, Faulkner does not inhabit the ghostly landscape of the unread greats. He is an ever-present touchstone, a writer consistently conjured. His work lives on, among writers and readers as at school. In a nation purportedly ill-read, As I Lay Dying - like Faulkner's other great novel The Sound And The Fury - is canonical, required reading in schools and universities.

The Bundren's ill-fated journey, the voices of Jewel, Darl, Cash, Dewey Dell and young Vardaman, come as close to common currency as is possible for literature in this country. There are few college graduates who cannot cite verbatim Vardaman's single-sentence chapter: 'My mother is a fish.' The eminent critic Harold Bloom wrote: 'By universal consent of critics and common readers, Faulkner is now recognised as the strongest American novelist of the century, clearly surpassing (Ernest) Hemingway and (Scott) Fitzgerald, and standing as an equal in the sequence that includes Hawthorne, Melville, Mark Twain and Henry James... As I Lay Dying may be the most original novel ever written by an American.'

This is a grand claim indeed, but its implication is clear: this is not, surely, a fiction that can be 'plagiarised'. If a poet pays tribute to 'The Waste Land', is the poem considered plagiarism? If a novelist makes a nod to Ulysses, is the gesture deemed theft? As Faulkner's 100th birthday approaches, he may hover only on the periphery of British consciousness, but in the US his legacy flourishes, from school to contemporary novel. The novelist Cormac McCarthy is his most immediate heir, but Faulkner's influence reaches further. The polyphonic structure of much recent American fiction, from Amy Tan to Terry McMillan, owes him a direct debt. Without As I Lay Dying and The Sound And The Fury, The Joy Luck Club could not have been written.

Faulkner's role in American literature is complex. It is not merely that the difficulty of his prose provides fodder for doctorates, nor that he popularised the idea of alternating narrators. It is that he represents, for good and ill, the Great American Water. He not only created mythic fiction (with the invention of his famed Yoknapatawpha County), but he also encouraged his own mythic creation.

A high school and college dropout he loudly protested his ignorance: 'All my writing life I have been a poet without education, who possessed only instinct and a fierce conviction and belief in the worth and truth of what he was doing, and an illimitable courage for rhetoric (personal pleasure in it too: I admit it) and who knew and cared for little else.' Untutored, he claimed to be unread: in an unpublished introduction to The Sound And The Fury written in 1933, he announced: 'With (this book) I learned to read and quit reading, since I have read nothing since.' Much has been made of the fact that he wrote As I Lay Dying in six short weeks in the autumn of 1929, while he worked nights in a power plant - and, legend has it, while drunk.

Myth surrounds Faulkner because he refused to confirm or deny stories, allowing rumour to burgeon where it would. He abhorred the media and, in 1955, outraged by an unauthorised biographical profile in the press, wrote a prescient article for Harper's entitled 'On Privacy'. In it, he jibed bitterly: 'Artists in America don't have to have privacy because they don't need to be artists as far as America is concerned. America doesn't need artists because they don't count in America; artists have no more place in American life than the employers of the weekly pictorial magazine staff-writers have in the private life of a Mississippi novelist (sic).'

He anticipated the writer's current dependence on celebrity, the subsuming of the work to flamboyant biography, the fiction to the photograph. In this respect he was a precursor to JD Salinger and Thomas Pynchon. He insisted: 'It is my ambition to be, as a private individual, abolished and voided from history, leaving it markless, no refuse save the printed books.'

Even those he was reluctant to discuss. In a 1962 interview to a hapless professor of English Literature from the University of Belgrade, Faulkner spoke only of fox-hunting and farming ('I like intelligent animals. Horses are intelligent, and so are dogs. Not as intelligent as rats.') Asked about his work, he replied: 'I cannot talk about my books, I don't remember them... once I have written, them I have nothing to do with them any longer.'

Pressed to reveal the works of fiction he admired, he cited Don Quixote, the Bible, Dickens, Chekhov and The Brothers Karamazov. His interviewer then asked if he liked Dostoevksy. 'I know nothing about Dostoevsky,' he said. 'I like The Brothers Karamazov.' As a result of his resistance and his careful filtering of information, his persona, in America at large, was that of a hard-drinking sportsman, a down-to-earth Southern gentleman farmer with little time for books or intellectual chatter.

When invited to the Kennedy White House for a dinner honouring Nobel Laureates, he declined, saying, 'Why, that's a hundred miles away. That's a long way to go just to eat.' That novels of such rigour and subtlety should have issued from so apparently blunt a man encourages the American fantasy of raw genius, of a literary natural upon whom the blessing of talent has serendipitously fallen.

Nothing could have been farther from the truth. By the age of 17, in 1914, Faulkner was reading Swinburne and Keats, Conrad Aiken and the Imagists. He was a protégé of Sherwood Anderson's. He was extremely well versed in European literature, and, in a 1952 interview with Loic Bouvard, admitted that he 'was influenced by Flaubert and by Balzac... And by Bergson, obviously. And I feel very close to Proust. After I had read A La Recherche du Temps Perdu I said "This is it!", and I wished I had written it myself.' A man who reads A La Recherche is a man who reads.

Indeed, when Faulkner famously explained 'My ambition is to put everything into one sentence - not only the present but the whole past on which it depends and which keeps overtaking the present, second by second', he was expressing not merely a Proustian concept, but a Bergsonian one. He was, unlike his peer and sometime rival Hemingway, a modernist to the core, closer to Virginia Woolf than to Fitzgerald. Unlike Hemingway or Fitzgerald, he was ruthlessly, insistently formally creative. Each of his novels was a reinvention of the form. 'Get it down. Take chances,' he once said. 'It may be bad, but that's the only way you can do anything really good.'

The irony, of course, is that Faulkner the American modernist was also a great regional writer, an unmistakeable voice of the South. He wrote and spoke often about the role of the Southern writer, claiming that 'art is no part of southern life' and that 'the South... is dead, killed by the Civil War.' If he believed this to be so, he brought the South to new life in the rich variety of his invented Yoknapatawpha County, from the wealthy Compsons to the dirt-poor Snopeses, in the lives of his black characters as in those of the whites.

While his forms were constantly changing, his landscapes and characters were those of the world in which he had been raised, scrupulously and lovingly rendered. The critic Malcolm Cowley noted that, in the literary generation of which both men were a part, 'Faulkner was the only one who remained loyal to the neighbourhood he had always known', even while 'he lived as a foreigner among his neighbours... an "internal emigré".' He stands, in that generation, as at once the most American and the most European of writers.

This curious hybrid was, in fact, more readily embraced in Europe than in his native US. For over a decade, from 1926, when Soldier's Pay was published, Faulkner enjoyed a burst of creative energy that needs no mythical embellishment. The Sound and The Fury, his fourth book, appeared in 1929; As I Lay Dying in 1930; Sanctuary in 1931; Light in August in 1932; Absalom! Absalom! in 1936; and so on.

His American star rose, and, as swiftly, fell. By 1944, he had published 17 books, but all were out of print. When, in that year, Cowley wrote to Faulkner to propose an article on his work, he received in return a demoralised letter from Hollywood, where Faulkner was struggling as an ill-paid scriptwriter (his most famous credits are The Big Sleep and To Have And Have Not): 'I think (at 46) that I have worked too hard at my (elected or doomed, I don't know which) trade, with pride but I believe not vanity, with plenty of ego but with humility too (being a poet, of course I give no fart for glory) to leave no better mark on this our pointless chronicle than I seem to be about to leave.'

Faulkner's work was then so unfashionable that Cowley faced many rejections before he could place his piece and begin to restore the author's reputation. In Europe, however, a groundswell of appreciation was already under way. Cowley wrote to Faulkner in August, 1945: 'Did I tell you what Jean-Paul Sartre said about your work?... he says that his work is based on qualities he learned from American literature. What he said about you was, 'Pour les jeunes en France, Faulkner c'est un dieu.' Roll that over your tongue.' It was admiration from foreign quarters that led to Faulkner's 1949 Nobel Prize for Literature, rather than any US lobby.

Only thereafter was he showered with accolades at home - the Howells Medal for distinguished fiction from the American Academy of Arts and Letters, the National Book Award for his Collected Stories, and the Gold Medal for Fiction, again from the American Academy.

By then, the period of his greatest work was over. His later novels do not have the vitality of his masterpieces. They often seem laboured, hollow, excessive. They were failures that Faulkner himself anticipated as early as 1933, when he wrote, recalling his excitement at The Sound And The Fury, 'I knew then... that whatever novels I should write in the future would be written without reluctance, but also without anticipation or joy: that in The Sound and The Fury I had already put perhaps the only thing in literature which would ever move me very much.' But in a single brief decade, Faulkner had produced more lasting works of fiction than many great writers do in a lifetime.

In the 35 years since Faulkner's death, in July, 1962, his work has been seen - in his native country, at least - as a central contribution to 20th-century literature. In his Nobel speech, he said: 'The poet's, the writer's... privilege (is) to help man endure by lifting his heart, by reminding him of the courage and honour and hope and pride and compassion and pity and sacrifice which have been the glory of his past. The poet's voice need not merely be the record of man, it can be one of the prop, the pillars to help him endure and prevail.' In contemporary American literature, Faulkner's voice is such a pillar.

When, in 1996, my first novel was honoured as one of five finalists for the PENL/Faulkner Award, endowed in Faulkner's memory, one speaker commented on the finalists' literary debt to Faulkner. Only then did it strike me that all four of my fellows were Southern writers, people upon whom, at one time or other, in one way or other, Faulkner the stylist, Faulkner the myth-maker, had made his mark. He has made his mark on me, too, if less overtly. One need not be Southern, or even American, to appreciate, Faulkner's force - as Swift's fine novel attests.