Lady Macbeth, Cordelia, Ophelia, Cleopatra ... Genevieve Fox reviews an Oscar-winning performance

"Well, is she a saint, or what?" said a young man in his thirties to a friend sitting next to him on the London Underground yesterday morning. "Wasn't she fantastic!" came the reply. "She is a star."

Diana has played many roles since she first entered the public eye as a shy, pedigree virgin 15 years ago: media-shy royal wife, fashionable wallflower, Slimmer of the Decade, Saint Teresa of the charity circuit, psychotic manhunter, malicious marriage-breaker. The list is endless. But last night on Panorama she combined all those roles and more besides in a composite character more complex, more daring, more studied and more thrilling than we could ever have hoped for.

The woman who once described herself to a schoolchild as "thick as a plank" took tips from almost every female victim Shakespeare ever created. She was Desdemona, who cannot put a foot right and whose bullish husband will not listen to her. She was the all-powerful and megalomaniac risk- taker Cleopatra, prepared to go to any lengths to have her way, a woman so slighted by Mark Antony's disloyalty that she unwittingly goads him to suicide, an emotionally unstable sex goddess who had her lover dancing on hot coals to fathom the depth of his love. She was the wronged Cordelia who defies the duplicity and hypocrisy of King Lear's court; the hapless Ophelia who loves as only she knows how and dies of it. And she was the sidelined Virgilia, whose husband Coriolanus is at the beck and call of his ambitious mother for whom he will go to any ends to please.

But where did she learn all these tricks? Not from textbooks, for sure. The "women's instincts" that confirmed her husband's infidelity - another universal phrase that aligned her with the thousands of ordinary women nursing cheated hearts - also guided her Oscar-worthy performance.

Diana hails from the contemporary, Madonna school of streetwise women. She has heeded her advisers. As compelling and at times as cringe-makingly sentimental as Michael Jackson, her performance was restrained, unfaltering and unforgettable. Only when she revealed the extent of her bulimia did the tears that we have not seen since the early Eighties threaten to flow. Better still, the pain that had driven her to this self-revelation was palpable. She chose her words carefully, effectively combining her limited, unpompous vocabulary with plenty of therapy-speak aphorisms such as: "The best way to destroy a personality is to isolate it." and "Knowledge is power."

Her sense of pace and timing was masterful. Had she herself been unfaithful with James Hewitt? The reply "Yes" flew back effortlessly on the wings of the doe-eyed direct look she has perfected. "I adored him. Yes, I loved him," she added unequivocally. In two simple phrases she had drawn us into the unashamed passion of a love affair between two young people. And then she vindicated herself with the phrase that followed: "But I was very let down." Then, when asked if she is playing a mindless game of tit for tat her reply again defies expectation: "I don't sit here with resentment," she says selflessly as the knives lunge in and out with exquisite precision. At another point she even manages to praise her husband's honesty an openness in his television interview last year when he admitted publicly to adultery: "It takes a lot to do that." she acknowledged.

She skilfully built up a macabre picture of malicious courtiers and a heartless husband conspiring against her. She pitched "My husband's side" and "the enemy" against herself: the isolated innocent fairy in the tower.

Was it simply out of jealousy that the Royal Family wanted to undermine her? Even here she managed to slip her knife in while appearing understanding of the Royal Family's weaknesses: "I think it was out of fear, because here was a strong woman doing her bit, and where was she getting her strength to continue?" So here is a woman so strong that she can understand, judge and forgive the Royal Family for its failings.

It was, once again, a brilliant use of the third person to confer status on herself. It is a grammatical device much used by the royals, but also reserved in tragedy for the likes of Othello and Cleopatra whose over- inflated sense of their own importance brings about their eventual downfall. For there was, especially at the end, quite of lot of megalomania about her global role and her capacity for bringing love to the world that could have come straight from the mouth of Michael Jackson. Here she was a sort of Mother Teresa with heavy eye make-up.

So what will we remember most? It could be the delicious irony of the claim: "I am not a political animal," which left us breathless in our seats after she had so deftly laid to waste the House of Windsor, the pinnacle of the British constitution. It may be the slightly deranged stare of Lady Macbeth that entered in her eyes when she said: "There were three of us in this marriage, so it was a bit crowded," a remark rounded off with a triumphant smile.

Will it be the immortal summing up of the Royal Family's capacity for sympathy during her bulimia: "People suggested a number of times that I was wasting food." Then she explained her feeling of being full with bulimia, perhaps courtesy of her sessions with her therapist: "It's like having a pair of arms around you." Which left us to ponder: and whose were the arms that were missing?

The establishment will condemn Diana for her daring and, in the main, the public will surely take her to their hearts. We forgive Diana her naffness (where did she get that hair-do?) and may vote her Queen of Hearts. We must assume that her reference to the wicked head-chopping queen in Alice in Wonderland was unwitting.

She has shaken the very foundations of the House of Windsor. Where does it leave Prince Charles? In his television interview last year with Jonathan Dimbleby he emerged as a bloodless, aristocratic, adulterous bore. On Monday night Diana presented herself as the standard bearer of modernity: a confident working mother, an honest, loving woman who is not afraid to show her emotions, a woman of the people quick to acknowledge that life is not as simple as we would like it to be.

For the elder son, the plot thickens from within as it seems William is being groomed by his mother to usurp his father. The biggest loser is likely to be the Queen. To keep the House of Windsor together long enough for a rehabilitated Charles or a matured William to take over the throne. She must be seeking elixirs that will ensure her longevity, since she probably has a long working life ahead of her.