Acclaimed novels, a knighthood and, most tellingingly, the fatwa which forced him into hiding have made him one of the most celebrated, and controversial, authors of our age. His latest book returns to the tortured relationship between East and West; its other obsession is with the power of female beauty. Here he reveals how writing it helped him escape the painful break-up of his marriage to Padma Lakshmi. By Andrew Anthony

Among other things, Salman Rushdie's latest novel, The Enchantress of Florence, is a hymn to the creative and destructive power of female beauty. The heroine is a young woman of such transporting physical allure that on seeing her men fall instantly and insanely in love, heedless to the ensuing dangers. Wherever could he have come by the idea?

'Ridiculously beautiful, comically beautiful' was how he once described Padma Lakshmi, the woman who became his fourth wife. But in fact, Rushdie insists, he had the concept of the novel before he met the Indian-American model, actress and cookbook author. Still, that piece of chronology won't prevent many readers from glimpsing the shade of Lakshmi in the 'slender' and ravishing 'banquet for the senses' that is Qara Koz, a woman 'meant for palaces, and kings'.

To be fair to Lakshmi, she seemed more at home at premieres than palaces, but then celebrity is the new royalty. From a distance, or more specifically through the prism of gossip columns, she looked like trouble from the very start, someone who was unlikely ever to provide a happy ending, at least in the conventional narrative sense.

According to Rushdie, the irony is that not only did she not inspire the book, she was very nearly the cause of its demise. 'To put it bluntly,' he says, 'I had to write it in spite of her. Because what happened to me last year when I was writing this book was a colossal calamity.' By this he means the end of his marriage. In January of 2007, Lakshmi asked for a divorce.

'It was like a nuclear bomb dropped in your living room when you're trying to work,' he says. 'I really feared for a time at the beginning of last year that I'd lost the book. I was in such a state of turmoil that I couldn't work. I've always prided myself on my discipline as a writer. I do it like a job. I get up in the morning and go to my desk. And I got scared because I thought, if I lose this, I've lost everything. Genuinely, I think it was the biggest act of will that I've ever been asked to make, including after the fatwa, just to pull my head back together.'

We meet in the Bloomsbury offices of his agent, Andrew Wylie, lined with copies of Roth, Eggers, Amis and, of course, Rushdie. It has to be said that he looks, head and all, remarkably together. He's dressed down in jeans and a casual yellow shirt, but everything else about him seems up. He's pleased with the novel, a fabulous interweaving of fiction and history across two continents, though his critics would say this is nothing new. Rushdie has a longstanding reputation, unfairly or not, for being pleased with himself. There is, however, no sign of smugness or superiority about the man across the desk from me. The famous mandarin hauteur is gone. What he emanates is relief.

He says there was a period, after Lakshmi left him, that he worked eight or nine hours a day for six weeks and produced 'about three pages'. But at the end of this block, he refound the story. 'And from then the book saved my life really. It just wrote itself. Voom. I would go to my desk every day and I was having more fun in there than I was having outside. It became joyful to write and I think some of that feeling of pleasure is there in the text.'

Indeed one of the pleasures of the book is the sense of delight that the prose takes in conjuring seductive myths from the solid foundations of history. 'A lot of it is true,' he says of the historical detail. 'All kinds of stuff that I suspect people will assume is magic realism, isn't.'

Rushdie has obviously done his homework, going by the six-page heavyweight bibliography included at the end of the book.

'Oh that's not the show-off bibliography,' he says with a smile that hints, but only hints, at self-mockery. 'There's one that's about four times as long, but you know you read a lot of books and not all of them are useful to you. So I just put in the ones that really helped.'

The story concerns a young European traveller who arrives at the court of the 16th-century Mughal Emperor Akbar, and beguiles his host with tales of Qara Koz, a legendary beauty who entrances powerful men. One of these men, the Shah of Persia, is so full of self-love and vanity that 'he did not consider the autonomy of her great beauty, which no man could own, which owned itself, and which would blow wherever it pleased, like the wind'.

Again, it doesn't require a literary detective to sniff out the pungent aroma of experience in this passage. But what's notable about it, and indeed the whole of the book, given the circumstances of its creation, is the impressive lack of bitterness or rancour. Instead it's almost a celebration of male amour fou.

The other major theme of the book is an old one for Rushdie, namely the mutual suspicion, mistrust and misunderstanding that has long existed between the East and the West. It's an issue, of course, that has seldom been more pertinent. At first he is reluctant to expand on the parallels. 'I'm just going to let the reader decide about that. My view is that I didn't want to put great big neon signs in the sky saying this is really about the 21st century.'

But while Rushdie handles the subject with imaginative subtlety, there is no getting away from the current relevance of subjects like foreignness, belonging and group loyalty. In one sense, he is an old-fashioned humanist, drawn to the stripped-down commonality of man. 'One of the things that I came to feel more than before, while writing the book, and it's not a very complicated truth, is the idea that human nature really is constant. And that the way in which human beings behave is just the way we behave, no matter what age we live in, and what our technology is, and what our particular political relations at the moment might be.'

In other words, it's our similarities, rather than our differences, that are our defining characteristic. But at the same time, he is pessimistic about the future of East-West relations. 'I do worry about it. If you have children you worry about the world you're leaving them. I hope I'm wrong but the best-case optimistic argument I can make is that if you look at the phenomenon of Islamic extremism, the places where it's most hated are the places where it's most powerful.'

Early in his career, he approached global affairs from a classic post-imperial perspective, which placed the burden of responsibility for geopolitical tension and cultural discrimination firmly with the wealthy West.

Having graduated from Cambridge in 1968, his politics were not untypical of his generation and class. There was an implied, and often explicit, criticism of western hegemony in his work. In The Satanic Verses, he writes of 'the Coca-Colonization of the planet' and refers to New York as the 'transatlantic New Rome with its Nazified architectural gigantism, which employed the oppressions of size to make its human occupants feel like worms'.

Rushdie still has his criticisms of America, where he lives for much of the time in the architectural gigantism of New York, but they are now moderated by a keener appreciation of the freedoms and advantages of western democracy. He remains a committed multiculturalist. 'I couldn't exist were it not for that transcultural movement. So obviously I'm biased. I do think, still think, there's a lot to celebrate about this mixture. If you live in a city like this or New York it's not possible to imagine it as monocultural. So in a sense it's clearly an enriching aspect of our daily lives.'

But he now has reservations about the direction that cultural diversity has taken. 'What I worry about and don't like,' he says, 'is the way in which the ideology of multiculturalism has declined into cultural relativism. I think that's very dangerous. When the Archbishop of Canterbury, for God's sake, says that you can't have one law for everybody... that's stupid.'

Rushdie would argue, with some justification, that he was never a proponent of cultural relativism. Nevertheless the event that made him an outspoken opponent was the fatwa on his life issued by the Ayatollah Khomeini on Valentine's Day in 1989. It was a defining moment in the cultural wars that have grown dramatically more political in recent years. Two hundred years after the Enlightenment, an author was under sentence of death for writing fiction. Suddenly all those beliefs, such as freedom of expression, that seemed so basic to literary and liberal life that no one bothered mentioning them were put to the ultimate life-and-death test.

And a number of writers, among them Germaine Greer, John Berger and John Le Carré, came down on the cultural relativist side of the argument. Their feeling was that, in not showing sufficient cultural sensitivity, Rushdie was the author of his troubles. Meanwhile Rushdie found himself in the strange position of having to rely on the support of the Prime Minister, Margaret Thatcher, and agencies of the establishment - Special Branch and the intelligence services - of which he had been stern critic. Did this affect his feelings towards the establishment?

'Yes,' he says, 'sort of. I only met Margaret Thatcher twice. The thing that I thought about meeting her was how extraordinarily intelligent she was. You really had to be on your game otherwise she'd make mincemeat of you.'

He developed not just an admiration, but a fondness for many people he came to know within the security and intelligence services. 'I've met a lot of Special Branch officers both at the everyday and higher levels and, with one or two exceptions, I liked all of them. I still have, improbably, quite a lot of friends in the British Special Branch.'

The only unkind words he has are reserved for the Foreign Office, which he found untrustworthy. 'I've always been able to handle anything as long as people are straight with you,' he says. 'Deviousness I can't deal with. That's not to my taste.'

He says that his access to this covert world, as well as to presidents, prime ministers and foreign ministers, makes him - or a bit of him - want to write a spy thriller. If he did, I say, it would be sure to be reviewed by John Le Carré (some observers suggest that Le Carré's unsympathetic stance on The Satanic Verses was prompted by a poor review Rushdie had given one of his books).

'I think that's all right now,' laughs Rushdie. 'The truth is I hate literary feuds. Life's too short. I admire so much of his work... I don't want to fight him. We had a disagreement. Fair enough, I have no hard feelings.'

He ascribes this spirit of forgiveness to the passage of time, and in particular the passing of the edict. It's been a decade since the Iranian government withdrew their support for the fatwa, effectively allowing Rushdie back into civilian life. He says it now feels like something that happened to him in the past.

There was a brief reprise last year when Rushdie was awarded a knighthood. A few opportunists in Pakistan, and clowns like Lord Ahmed over here, tried to generate a firestorm of protest, but it came to nothing.

Though it did produce one golden vignette on Question Time, when Shirley Williams argued that the knighthood was 'not very clever' because Rushdie had 'deeply offended Muslims in a very powerful way', and he had 'been protected by the British police for many years at great expense to the taxpayer'. The Liberal Democrat Baroness was then taken apart by Rushdie's friend, Christopher Hitchens.

Others were simply surprised that Rushdie had accepted an award that seems inseparable from Britain's class-based and, even colonial, past. He says that he was simply delighted to be 'honoured in the same way as William Golding and VS Naipaul and Kingsley Amis and VS Pritchett. I'll be in that club, I don't mind.'

But people look at your history coming from the left....

'Yeah,' he interrupts, 'well frankly I don't give a fuck about that.'

Since 2001, he's been joined in the political arena by a number of fellow authors, some of whom have taken up a more prominent, and sometimes more controversial, position than Rushdie.

'I think, fair enough,' says Rushdie. 'It's a big subject that everybody's thinking about. I don't agree with all Christopher Hitchens's views but that doesn't stop him being my friend. And I don't agree with everything Martin [Amis] said, but he's entirely entitled to say it without being abused in the way that he was.'

VS Naipaul may find that comment a little rich. In a 2002 article attacking the massacres of Muslims in India, Rushdie said that in supporting Hindu nationalism, Naipaul 'makes himself a fellow-traveller of fascism and disgraces the Nobel award'.

The point for Rushdie, however, is that he and his friends remain on the progressive side of the argument. 'My instincts are completely liberal, but I do think we live in a very weird world and we do need to realise that the world has changed. And when Martin, Ian [McEwan] and I say that we get called conservative. But,' he emphatically adds, 'we're not conservative.'

It's the one moment of annoyance he shows. A lot of the interview is spent discussing politics, everything from the debate on strengthening British anti-terror laws ('I'm somewhere in the middle, really') to the authoritarian actions of the Bush administration, but Rushdie insists he wants to get away from the subject. He resents being recruited to positions he does not hold, a legacy, he thinks, of the fatwa.

'I was always a writer who was interested in politics, and then I think I had an overdose of it - be careful what you wish for. And one of the effects on my sensibility is to make me want to back away from public discourse. I just want to stay at home and write stories and send them out every couple of years. That's why I got into the game, not to be some major public spokesman on political issues.'

The next book he wants to write is another children's book, a sequel of sorts to Haroun and the Sea of Stories. 'When I wrote Haroun,' he explains, 'my then only son was 10. Now I've got another 10-year-old who is busily saying, "Where's my book?"'

He considers this for a second, and then demonstrating his new-found equanimity, adds with a smile: 'That seems like a fair question.'

Rushdie redux

Personal life

Born 19 June 1947 in Mumbai. Educated at King's College, Cambridge, where he read History. Married four times, he has two sons - Zafar, with first wife Clarissa Luard, and Milan, with third wife Elizabeth West.

Career

1974 Grimus, his first novel.

1981 Midnight's Children, widely regarded as his masterpiece. Won that year's Booker Prize and 1993's Booker of Bookers prize.

1983 Shame, a fictionalised account of Pakistani politics. Narrowly missed out on the Booker Prize.

1988 The Satanic Verses, famously the subject of a fatwa by Iranian leader Ayatollah Khomeini. Forced to go into hiding when a reward was offered for his death.

1995 The Moor's Last Sigh, winner of the Whitbread prize.

2005 Shalimar the Clown, nominated for the Whitbread prize.

June 2007 Awarded a knighthood, an act that was condemned by Muslims around the world, including governments of Iran and Pakistan.

He says: 'When you write, you write out of your best self. Everything else drops away.'

They say: 'To Indian people, he's as large as Faulkner or Hemingway' -

Padma Lakshmi

The Enchantress of Florence is published by Jonathan Cape at £18.99. To order a copy for £17.99 with free p&p, go to observer.co.uk/bookshop or call 0870 836 0885