The Lambs of London by Peter Ackroyd

Deceit in a city of masks

Mary Lamb is probably remembered less now for her collaboration with her brother Charles on Tales from Shakespeare than for the fact that she murdered her mother in a fit of madness. These lapses of sanity recurred throughout her life (1764-1847); her brother was also her carer. And now here comes Peter Ackroyd with a deft flight of fancy about the origins of her madness, the climate of the Lamb household, and some hitherto unknown works by Shakespeare, including the play Vortigern.

Shakespeare pervades this novel - Shakespeare and London, its backdrop. The author's knowledge of the city is compendious, of course, and means that for the purposes of fiction, he is simply able to evoke the streets, the river, the sights and sounds, with pungent asides.

A theatre that smells of damp straw, licquorice cordial and cherries; the disfigured beggar girl who picks off her goitre and puts it in her pocket when a benefactor is out of sight: it is as though Ackroyd just takes a convenient step backwards, into familiar territory, and produces with a flourish this short, crisp piece of fiction.

The central figure is 17-year-old William Ireland, son of a bookseller, an eloquent and precocious youth first met having sex on top of a stagecoach - a tricky procedure, one would have thought, but we must take the author's word for it. William meets both Charles and Mary Lamb, and it emerges that he has mysteriously come into possession of a treasure trove of Shakespeare relics: letters, a poem, a seal, a lock of hair, an entire unknown play.

William is grave and regretful about the loyalty to his source that makes him unable to reveal an identity or explanation, but the texts - examples of which are provided - and the materials are authenticated by a respectable scholar. Everyone becomes excited; not least William's father Samuel, who sees potential gain. Indeed, before long the bookshop has become the Shakespeare Museum, ostensibly a non-profit-making venture (William is squeamish about this) but not averse to the odd token of appreciation.

The Lambs are in the thick of it, and Mary finds herself strongly drawn to young William. Certain ominous motifs flicker through the story - self-mutilation by Mary, and her obsession with cutlery; the river, with its cargo of suicides. On an excursion, Mary accidentally falls in, her red dress billowing out like a flower - the flower of death, thinks William.

Her relationship with her mother is tense; Mary cries out to her brother that she is already lying in the family grave. And the claustrophobic nature of the Lamb household is nicely apparent: the twitching mother, the senile father who makes random bizarre observations and is given to urinating out of the window, Charles's habit of reeling home drunk after an evening with his cronies.

Rowlandson has a walk-on part, as do de Quincey, Sheridan, the actress Mrs Jordan, and others. An authorial note says that characters have been invented, and the life of the Lamb family changed, for the sake of the larger narrative. Fact or fiction, there is a seamless mesh. Charles's favourite drinking den is the Salutation and Cat; I have no idea if this is an invention, but it is a wonderful name for a pub.

Charles and his friends, assisted by Mary, embark on an amateur production of the mechanicals' scene from A Midsummer Night's Dream which gets cheerfully bogged down in arcane points of Shakepearean language. On a grander scale, the "lost play" Vortigern is staged at Drury Lane, starring Kemble and Mrs Siddons. The opening night is attended by everyone who matters in London, but the play provokes gales of laughter, and the woad on the skins of the ancient Britons stains the wooden shields of the Roman infantry.

The Shakepearean bubble bursts, and things hurtle towards a disastrous conclusion that I would not dream of revealing. All in all, this is a marvellously adroit tale.

Penelope Lively's latest novel is 'The Photograph' (Penguin)