For poet and novelist Michael Ondaatje, all stories start with three people in a room. "And then what happens, happens." Character is far more important to him than plot. "I'm trying to find something out. I'm not a natural storyteller. These characters come out of somewhere and help create or re-create something, maybe a life, maybe something else. There is no plan, I never have one."

No artistic manifesto, no absolutes issue readily from him. This is not a writer with a store of prepared theories and answers. His approach towards writing is as impressionistic and as elusive as his subtle, fragmented, though deliberate fictions.

Ondaatje believes in making the reader an equal. "I think readers should have to work," he says and they do - threads are important, images endure whether that of the English patient falling from the sky like a burning bird, or the young nun swept over the bridge in In The Skin of the Lion.

Soft-spoken and vaguely distracted, the unassuming, relaxed Ondaatje is on tour, talking about his new novel Anil's Ghost, his first since the publication eight years ago of The English Patient. That strange, beautiful book collected superb reviews, went on to share the 1992 Booker Prize with Barry Unworth's worthy historical saga, Sacred Hun- ger, a book as weighty and traditional as Ondaatje's ambivalent evocative study of displacement is full of light, air and mystery. And then there was the multi-Academy-Award-winning film version in 1997 which, while capturing something of the atmosphere of the novel, is sufficiently different for Ondaatje to say he enjoyed it because it is "not my book".

Widely respected as a writer's writer of imagination and poetic originality long before the movie was released - In the Skin of the Lion, published in 1987, is still considered by many to be his finest to date - Ondaatje has become internationally famous because of film director Anthony Mingella's treatment of The English Patient.

"That poster has become the bane of my life," he says, conscious that the film has tended to linger as a desert romance whereas the novel is complex and multi-layered. "I was disappointed Kip had so small a part in the movie, because he is so important in the book," and he agrees the novel is the story of Hana the young nurse who sees her salvation in tending the blackened body of the enigmatic Englishman. Her disembodied romance with the young Indian sapper Kip contrasts with, and overshadows, the more brutal love affair between Katherine and Almasy which was to dominate the screenplay.

Success often has a price, and Ondaatje has sensed this through the mixed reviews he is currently receiving. As novel and film, The English Patient has left its mark on the new novel. "Now some reviewers seem to think it has been written as a film, which it hasn't," he shrugs, not quite neutrally. Anil's Ghost is a powerful book. It is also an angry one, as it examines the present-day fear and terror in his native Sri Lanka, caught in a war sponsored by gun and drug-runners. Anil, a forensic anthropologist, returns to her home country after 18 years in an effort to separate the newly dead from the ancient. It is also less lyrical than his previous books.

"There is a responsibility about this kind of book. I wanted to get a sense of what living in a country at war is like, not for the soldiers but for the ordinary people. I spent seven years of fussing and worrying about that. What I didn't want to do was write about the famous people. I didn't want to write a war novel."

In doing so he was aware of writing about a country he had left at the age of 11. "Yes but I have been back since, several times, but the first time not until more than 20 years had passed." In common with Anil, Ondaatje returned home to Sri Lanka as an outsider.

"When I came back the first time, I had already had a couple of books published but no one there knew about them. When I said I was a writer, they said `yeah, sure', no one believed me. It made it easier though; they talked to me. Our literary tradition is not a written one. It has always been more oral. There's a good saying in Sri Lanka, `a well-told lie is worth 1,000 facts'."

He had left to go to school. "It was very ordinary. Children of my social class were sent to England for their education." Careful not to give the impression he was a pampered aristocrat, Ondaatje says by the time he went to England, his father, Mervyn, had drunk the family to poverty and divorce. "I am the youngest of four and I went from England to Canada where one of my brothers had settled. I saw Canada as a new life; it made me want to be a new person. Canada made me a writer."

But before that, there had been an existence that seems to have itself come from the pages of a novel. The Sri Lanka that Ondaatje was born into in 1943 was still Ceylon and attractively old world. "My father ran a tea plantation, but by the time I was old enough to notice he had drunk away most of what we had." The last of a series of family homes was a long bungalow high in the mountains.

Throughout his childhood, there were various plantations as his father moved from job to job. There the children ran wild. Tea plantations are studies in mathematical exactitude. Highly ordered places, yet, if neglected, all that order will revert to jungle within five years. His parents were both from "gracious, genteel families" but his father's manic drinking combined with his mother's theatrical and very public methods of dealing with it were to cause havoc. They were also lovers of books; his father read, while his mother declaimed poetry with great abandon and for some years, attempted to make sense of her husband's behaviour.

Sri Lanka, as Ceylon has been known since 1972, is now as heavily populated by ghosts for Ondaatje as is his fiction. "It is a beautiful country, tiny and so colourful. There are wonderful flowers." On a map, it looks like a tear-drop suspended in the Indian Ocean, off the coast of India.

Ondaatje's early life was acted out in what sounds like the death throes of a variation of the Raj. "Everyone was vaguely related and had Sinhalese, Tamil, Dutch, British and Burgher blood in them, going back many generations," he writes in a memoir, Running in the Family (1983).

"There was a large gap between this circle and the Europeans and English who were never part of the Ceylonese community. The British were seen as transients, snobs and racists, and were quite separate from those who had intermarried and who lived there permanently. My father always claimed to be a Ceylon Tamil, though that was probably more valid about three centuries earlier."

Ondaatje himself claims mixed Dutch, Sinhalese and Tamil ancestry. With his thick greying hair, bright blue eyes and slight accent, Canadian touched by somewhere else, he could be from anywhere. He seems a natural, unpretentious character, physically robust-looking and handsome, younger than his years. By far the most obvious thing about him is that Ondaatje is a dreamer who has always lived in the world of his imagination, a place where memory, history, fact and detail thrive in surreal harmony.

"There were two things I always wanted to be, a cowboy and a jazz musician, and I've written about both." In his early verse sequence, The Collected Works of Billy the Kid (1970), Ondaatje has his Billy reply, when asked in an exclusive prison interview if he thinks he will last in people's memories: "I'll be with the world till she dies." For Ondaatje the dead never fully depart.

The tragic romance of Ondaatje's parents is really that of his father, an engaging misfit who drove his own outraged though loyal father to distraction as he wandered from one mess to another, from one broken engagement to the next. Dominating Ondaatje's childhood memories, though, is Lalla, his colourful maternal grandmother whose finest hours came after she was widowed.

Her great claim to fame lay in being "the first woman in Ceylon to have a mastecomy". Lalla was an ardent supporter of new causes and on her death left her body to six hospitals. The false breast had a life of its own and was frequently fought over by dogs and the Ondaatje children; at times they were even sent to fetch it.

Grandmother was also given to stealing flowers. Lalla was known for arriving at houses to plunder gardens, presenting this booty elsewhere as her calling card though she always acknowledged the source. Her raids eventually caused Ondaatje's father to plant cactus instead of flowers. Having long searched for a fittingly dramatic death, she found it and was washed away, as if in a South American novel, by a great flood.

Humour proved a vital element in keeping his mismatched parents together and Ondaatje says of Sri Lankan humour "it is very surreal. Sri Lanka is a very funny place. People do laugh, often at the oddest thing." He mentions a story in which two men discuss a particularly dangerous stretch of coast road. One of them asks if the other remembers a man who has died and continues, "every time my wife and I reach that particular bend we have an argument about him". That for Ondaatje is the essence of the bizarre quality of Sri Lankan humour.

Many of his stories about his family have been recreated by proxy. He was not present for his father's funeral but has discovered it was a suitably black farce featuring a coffin which was too small, "so they had to build a new one in the house" which they then couldn't get out, "so they had to break the doors down". After the divorce, his parents never saw each again, and his mother, refusing to ask for money, began working in a series of jobs as a hotel housekeeper, eventually moving to London.

Arriving in England in 1954 aged 11 was not a happy experience - "I was a fish out of water" - and it didn't improve with time. "I didn't do well at school; I was bad at maths and had to spend extra time at that subject so I didn't do English at A Level." He was also aware of being an outsider from a colony. Still, he was good at cricket, but it seems as if Ondaatje's life did not really begin until he arrived in Canada where he began "reading like crazy". He studied English and History at university and also began writing poetry, quickly discovering a tendency of mixing poetry and prose.

"I spent six or seven years writing lyric poetry and published my first book The Danity Monsters." A pattern emerged, that of writing verse sequences and then returning to them, adding long prose passages. He also realised he was not interested in looking back. Of the development of his technique he says: "I read a book by Gary Snyder and was struck by the mixture of genres." Poetry for Ondaatje, "tightens - a machine can't have too many parts".

In his first novel, Coming Through Slaughter (1979), which is based on the life of jazz cornetist Buddy Bolden, Ondaatje explored his interest in faction and fact. The book has an improvisational tone, reflecting the music Bolden played.

"I went to New Oreleans to find about him. At first it was a big mistake; the Mardi Gras was going on. But after a few days it ended and everyone was hung-over, walking around in slow motion. It was 1910 all over again." Ondaatje believes that what emerged from his research was that the Bolden who went publicly crazy was not insane. That novel demonstrates Ondaatje's approach to fact, reinvention and the way a life emerges though memory and recall. In the Skin of the Lion looks beyond character to the early 20th century, the building of Toronto on emigrant labour and with it the shaping of several sets of lives. Some of the characters move on to The English Patient, where two, Hana and Caravaggio, are re-united, and join with two other lost souls, in a villa which has become a ghost house, and where, "there was no defence but to look for truth in others".

"My books sort of write themselves. I might not know what a book is about until after the first draft. It's the same with a character: one might just come along and after a while I'll think, `I don't know if I like this guy' or `hey this guy is interesting' and he may become more important than I had first thought." This proves true of Gamini in the new book, initially a secondary character, he gradually replaces Anil as its centre and becomes the book's ruling conscience.

History fascinates him, and judging by the chronology through which his books are moving he has arrived at the present. Ondaatje is part of Toronto's diverse yet cohesive literary community. "America, the US, is so concentrated. Outsiders do stand out. Immigrant writers are noticed as being different. In Canada, immigrant writers are part of the whole. I like that."

Anil's Ghost by Michael Ondaatje is published by Bloomsbury, price £16.99 in UK