A life less ordinary: Maggie O'Farrell's diaries have provided the author with plenty of inspiration

Maggie O'Farrell confesses that her new novel, The Hand That First Held Mine, should have appeared last summer. The reason it didn't – 12-month-old Iris – can be heard moaning wearily through the baby monitor in the breakfast-room where we talk. A fluffy black cat stares back from the strip of garden behind the Victorian red-brick villa on the fringes of Hampstead Heath that O'Farrell also shares with her husband, fellow writer William Sutcliffe, and their son, six-year-old Saul. "Just before I had Iris, I was supposed to be handing in the final manuscript," she says. "I couldn't even remember the word for a teapot, so I begged them to put publication back."

Completing the book post-parturition provided useful copy. One of its narrative strands follows Eleni, a Finnish artist living in London, whose baby, like O'Farrell's first child, was delivered by emergency Caesarean. Eleni's hour-by-hour care for her newborn is sharply evoked. O'Farrell used diary entries she wrote after her son's birth to inform early drafts. "You do forget. I've kept a diary since I was nine or 10. I wrote in it a lot when I was a teenager – awful things that I must get round to burning one day."

O'Farrell's five novels might best be described as literary psychological suspense, though she resists such labels. They're written in beautiful, pared-down prose. Often love stories, they dart around in time and place, laying bare old family secrets, unravelling the wicked tricks of memory. "Families are endlessly interesting to writers," she says. "If you've got five people, like the family I grew up in" – she is the middle sister of three – "then you've got 20 different relationships. It's a ready-made crucible." The formula clearly works. After You'd Gone (2000) won a Betty Trask prize, The Distance Between Us (2004) the Somerset Maugham. The books are consistent bestsellers.

The Hand That First Held Mine concerns Eleni and her boyfriend Ted as they struggle to adjust to new parenthood, while Ted becomes haunted by disturbing flashbacks from his childhood. In parallel runs an earlier tale of a feisty woman journalist named Lexie Sinclair. Sent down from Oxford in the late 1950s, she eventually winds up as a newspaper features writer. The link between the two stories is a long time coming, but when finally revealed, surprises and satisfies.

O'Farrell enjoyed the research. "I read a lot of fiction from around that time: Muriel Spark, Margaret Drabble... The way people spoke was completely different then. I had to get the cadences right and the idiomatic London English. Everyone spoke so posh and now they dumb down their speech. It's steeped in Virago Modern Classics, this book." She also read the memoirs of pioneering women journalists such as Mary Stott, Lena Jeger and Jill Tweedie, and fossicked in newspaper archives for their articles. Lexie starts on a national paper as a dogsbody typing up Births, Deaths and Marriages. O'Farrell herself spent five years as a journalist on this very newspaper. "I did the TV listings, which is the worst job I've ever done – much worse than being a waitress." Things improved. By the time she left to pursue her writing career, she was deputy to the literary editor.

The main territory of her imagination shifts between London and Scotland. Shortly after she was born in Coleraine, Northern Ireland, in 1972, her father, a lecturer in economics, relocated the family to Wales. When O'Farrell was 12, the family progressed to Edinburgh, where they live still. So which is she: Irish, Scottish, Welsh or British? "All of them and none... As I get older people tell me I look Irish [but] Scotland's where I feel at home. We were living there for three years but came back to London recently for a variety of reasons. My husband had to drag me kicking and screaming." She laughs.

Have reading and writing always been important to her? "My mum's a huge reader." Pre-children, her mother taught history and geography. "She always read to us. I was very lucky. Reading was the thing to do." There is no tradition of creative writing in the family, so where did that pop up from? "It's always been central to me. I remember at the age of five saying I wanted to write a story and asking my mother if she would write it for me. She said, 'If I wrote it, it would be my story, it wouldn't be yours.' I was very struck by this, the idea of authorship and ownership."

A seminal childhood event was a mystery viral infection with the symptoms of cerebellar ataxia, a nervous-system disorder, which she had when she was eight. "I was bedridden, off school for two years." Was the period a Robert Louis Stevenson-type of writer's apprenticeship? Not entirely. "I was physically incapacitated, so I couldn't hold a book. I listened to a lot of story tapes. When I had a bit more motor control, I read. Reading was a way to escape." The experience made its way into The Distance Between Us.

At Cambridge, O'Farrell read English literature and attended writing workshops run by Jo Shapcott and Jane Rogers. She also met her husband-to-be, though they didn't get together for another 10 years. Was he writing, too, at university? "Yes. I was struck by how focused and serious about it he was, probably more so than me."

Soon after she graduated, she lived in Hong Kong, "teaching English and having a good time. I graduated in the last recession. I could either have stayed on the dole or gone to Hong Kong." This, too, provided useful fodder for fiction. Soon afterwards she moved to London, where she worked as a waitress, then briefly at the Poetry Society, before moving into journalism. "I had to pay my rent. At the time I was writing poetry, but I wasn't very good." She turned to prose and what became After You'd Gone, and success followed. Hadn't she first tried to write what eventually became her fourth novel, 2006's The Vanishing Act of Esme Lennox? "That's right. It was 1994, after Thatcher's 'care in the community' business and stories were surfacing about women who had been locked away for nothing – for teenage rebellion. I wanted to write about it, but I was far too young. I put it away until I thought of a way to construct it." Fledgling writers take note.

O'Farrell creates an intense, passionate atmosphere in her novels, often writing in the historic present and showing the world entirely through the eyes of her characters. How does she set about achieving that intensity? "I try to see the character clearly before I start. They seem to appear fully formed. Names are very important." With the new novel, "I wanted to write a story about two people, two periods in the same city. I always find it easier to write about a place where I'm not, so reality can't intrude on the world you're creating."

The timing of key revelations is crucial. "I have several people I show manuscripts to. It's useful to know when people have guessed [the link] and what was the clue."

While she always writes the first draft of a novel straight through, without looking back, "I find beginnings pretty hard, so I do them last. There's something special about writing the first draft. You don't know what's going to happen. I do 13 or 15 drafts. I love cutting and moving things about."

Baby Iris has been quiet for some time and only the background beeping of a Nintendo DS intrudes. I ask O'Farrell what she plans to write next. "I have two ideas for new books. I can't say which will win the race. I've never had that situation before."

And any other ambitions? Her eyes sparkle. "Oh, just to get some sleep!"

The extract

The Hand That First Held Mine, By Maggie O'Farrell (Headline £16.99)

'... Mrs Collins had been shocked that morning when Lexie came upon her on the stairs and let slip she was going to Soho later in the day... "Soho?" Mrs Collins [said]. "It's full of Bohemians and inebriates." Then she narrowed her eyes. "You," she said, and pointed at Lexie, "you're always asking why, aren't you? Curiosity killed the cat"'