Rushdie's return to the world of fiction has spawned one of his best novels yet. Dreams, high passion and the stories and traditions of both East and West combine in a masterful and beguiling take on Rennaissance Florence and its ripple effect throughout the courts of Asia.

Always in his element recreating the colourful world of imperial India, the action moves back and forth between Sikri, the capital of the Mughal Empire, and Florence at the height of its creativity in the early 15th century.

Onto this colourful backdrop, where expectations are defied and nothing is as it seems, Rushdie has pasted a vast and thoroughly entertaining cast of characters who strut their hour upon their creator's stage with all the mystery and aplomb we have come to expect from the pen of the ultimate storyteller.

At the heart of the action is the mysterious blond-haired stranger who calls himself the Mughal of Love (Mogor) and arrives in Sikri with a story to tell - and a secret to reveal - to the narcissitic but totally disillusioned Emperor Akbar.

Mogor is a classic Rushdie character - he arrives straight from the pages of the Arabian Nights. We first meet him on board ship as he travels to India as a stowaway. A magician by trade, a cruel trickster and talented multi-linguist, his words and his deeds are a series of oxymorons.

Take, for example, his daring arrival in the bustling Mughal capital where he luxuriates in the 'ululating, teasing' laughter of enticingly scented women only to end up shortly afterwards in 'an odorous whorehouse, snoring lustily next to an insomniac tart.'

Rushdie is always at his best in this world of stark metaphor and startling simile. Words and ideas jostle together in sublime contrast and joyful juxtaposition.

There is no more perfect emanation of this perfect blend of contradiction than in the Emperor himself. This greatest of rulers is a Muslim vegetarian, a warrior who wants only peace and a philosopher-king.

Jaded by the company of sycophants and his mind full of philosophy and life's conundrums, he dares (albeit briefly!) to think of himself as an 'I' rather than the traditional royal 'we.'

Rushdie's factional landscape is littered with the detritus of rambling post-modernist stylistics. The provenance of Mogor's coat sends the narrator on an exhilarating journey to the Rialto bridge in Venice, a physical description of the Emperor's ancestry propels us back through generations of bloody history and his imaginary queen provides an exhaustive and exhausting course on the art of sexual seduction.

Along the way there are shining nuggets of world weary cynicism as the diverse cast reveal the slings and arrows of their life journey. 'Revenge,' says the skinny and resentful whore known as Skeleton, 'is an unattainable luxury, like partridges, or childhood.'

The young Mogor's fantastical tale opens up another rich thread in this wonderful patchwork quilt of a novel. He claims to be a relative of Akbar, son of the beautiful and mysterious 'Lady Black Eyes' who was captured by the Shah of Persia and became the lover of Argalia, a Florentine mercenary.

Thus we enter the sensual world of Florence's famous courtesans where humanist philosophy is taking hold, Argalia's boyhood friend Niccolo Machiavelli is learning about the true brutality of power and one woman is trying desperately to command her own destiny...

Rushdie's perilous path through the poetic and the prosaic is a delightful and dizzying experience. The combination of history and myth, reality and fantasy and, above all, East and West is a heady mix and perhaps the nearest the author has ever come to writing a traditional historical novel.

So prepare to be enchanted because this is vintage Rushdie!

(Jonathan Cape, hardback, £18.99)