Flights of fancy dress: Polly Borland's portraits marry the infantile and the fetishistic

In 1978, in Melbourne, Australia, photographer Polly Borland was at a party with a little-known band called The Birthday Party. Borland was getting a ribbing from a friend, but the band's guitarist, Nick Cave, stepped in to defend her.

So began a 30-year relationship between the pair which continues to this day. Borland lives with her husband, the director of The Road, John Hillcoat, in the same area of Brighton as Cave and his wife, the British model Susie Bick. Borland has photographed Cave numerous times, most recently for the cover of "Money and Run", Cave's forthcoming track with supergroup UNKLE. Now, there is Smudge, an exhibition and book featuring Cave posing in various infantile, adapted costumes, opening at Other Criteria, Damien Hirst's central London gallery on 18 March.

Borland meets me at the exhibition space. With her severe bob, large glasses and Australian accent she is easily recognised. She peppers her speech with an effusive laugh that punctuates periods of quieter thoughtfulness.

"Nick's kids are a year older than our son and I am good friends with his wife," she says. "We all hang out together. He asked me to do a shot for him and I asked him for a favour in return. He loved all the dressing up. I just think that he's never been interested in rules. Neither have I. Maybe it's an Australian thing. You get to a certain age and you think: who cares? We've got to enjoy ourselves."

Borland was born in Melbourne in 1959. She was given her first camera, a Nikkor, by her father when she was 16. She says she was studying at art school when she first encountered what went on to be her main influences: Diane Arbus, photojournalist Weegee, Larry Clark.

Shortly after leaving art school, Borland began working for newspapers and magazines. She moved to England in 1989.

Borland's portrait photography subtly undermines her subjects' stature. Given the rare opportunity to photograph the Queen and Gordon Brown, she took their pictures against sparkly backgrounds; Peter Lilley, when there was speculation in the press about his sexuality, sat in front of a glittering backdrop. "Editorial work came easily to me, but it was always a means to an end – it consumed me, it interested me, but I still found it creatively restrictive," she says.

Her artistic work tends to marry the infantile and the fetishistic. In one photographic series, 2001's The Babies, Borland explores the world of infantilism in adult men who enjoy dressing up as babies. In 2008's Bunny, produced with a tall, blonde Brighton actress called Gwen, there is equally something stunning yet sinister: in one picture, Gwen is pictured topless, bent in half, wearing what are apparently a pair of stuffed tights which are made to resemble bunny ears (curiously, when discussing her relationship with Gwen now, Borland falls silent). "Much of my work is about love," she says. "I know that sounds naive, but it is about my relationship with people and their ability to trust me. I don't feel like I am manipulating people." She says with the adult baby work she felt like a mother figure. "The common link was that they all felt unloved as kids. I actually felt the whole thing wasn't that psychologically interesting. That's how it resonated with me. That's how they chose to rationalise it. I am a voyeur; at the same time I am willing to get stuck in too." She says she also modelled in the Bunny series, and that you can see her "if you look hard enough".

The new work – various models wearing all-in-one body stockings decorated with cheap fancy dress, their faces concealed with masks – is as much about Borland's relationship with her subjects as it is about imagery.

It all started, she says, when Hillcoat was shooting The Road in Pittsburgh. Borland was left to home-school their young son, and began shooting him and one of his schoolfriends in various costumes. She said she could not stray into the "areas she normally explores" – namely, nudity, and how it interacts with childlike behaviour.

Returning to Brighton, Borland decided to spend longer on the project. She roped in Cave, local photographer Mark Vessey and Sherald Lamden, who was then creative director of Alexander McQueen's contemporary line, McQ. "So it was that I went around to her house in Brighton," writes Cave in the introduction to Smudge's accompanying book. "We played dress up." According to him, Borland squeezed him into everything from body-stockings to rubber bathing caps and crotch-accentuating leotards.

"I thought I would marry the photos of Mark and Nick, which I did separately," she says. "I started with conventional costumes, but I felt that was a bit limited so I started developing my own costumes. Very basic. I used little bits of costume with body stockings and leotards and tights and pantyhose." She says "the ambience is different" with the different models; in many photographs, figure-hugging lycra make the models' identities unmistakeable; in others, through the use of cartoon-like costumes, male and female elide.

Despite Borland's protestations that her portraiture doesn't "stretch her", she has little idea why she is drawn to society's extremes.

"I think that anyone who is working creatively is a bit like litmus paper," she concludes. "I soak up a lot of stuff. I am hyper-sensitive and along the way I lead quite a conventional life. Maybe I am not acting out that stuff because it's in my work. It comes from existential angst. I think life's difficult."

Twenty prints from 'Smudge' will be on display and for sale at Other Criteria Gallery, New Bond St, London W1 (www.othercriteria.com) to 7 April. The accompanying book is published by Actar (£19.90)