Sister act: Dannii Minogue reveals all

When she quit her role as a judge on The X Factor, Sharon Osbourne was pretty clear about her reasons. Well, just one reason, actually: Dannii Minogue. Dannii, she said, had no sense of humour and, unforgivably, bad plastic surgery. Even with Simon Cowell there to separate them, Osbourne couldn't bear to spend another six months in her company.

Well, I can't speak for the rest of her, but Dannii's doll-like features are, in person, perfectly plausible – surgery or not (I can't tell, though a colleague assures me that her nose is "soooo Nineties", whatever that means). Furthermore, when I arrive for our interview, she's bopping around a stage in a Notting Hill theatre, balancing expertly on heels that ought to be reclassified as stilts. Her iPod is plugged into the stereo, which whoops "I'm Every Woman" by Chaka Khan. And when she spots me hovering, notebook and dictaphone in hand, she says with a grin: "If you're on the stage, you have to dance!"

By this point I am, indeed, on the stage. Make the journalist dance – that, depending on your point of view, is evidence that either: a) Dannii does have a sense of humour; or b) she knows exactly how to demonstrate who's going to be in charge of this interview. Probably both. In any case, I'm dancing, and she's laughing.

Until Cowell came calling, Dannii, now 37, was still trapped in her sister's diminutive shadow. Born in Melbourne three years after Kylie, she followed her, first into Australian soap operas (a year on Home and Away) and then into the music business. Sure, Dannii had her theatre work or her brief dominance of the dance charts to set her apart. But any British article about her would still begin, as this one almost does, by comparing her to her even more successful sibling. However, on The X Factor, which she joined in 2007, she's a star in her own right – even if it now means being compared to Sharon Osbourne, or to Cheryl Cole.

Dannii, tiny atop those heels, blue-eyed and bob-haired (this week, at least), is wearing a gathered black chiffon dress with a beaded yoke. I wouldn't normally pay too much attention to her outfit, were it not for the extreme fascination of the celebrity weeklies and their readers. For this year's X Factor meta-story is the Dannii vs Cheryl fashion war; every time the two of them turn up to auditions, their clothes are painstakingly assessed and rated.

Depending on which glossy magazine you read, the pair are fairly equally matched so far. But the day before Dannii and I meet, they've both been papped wearing – shock! horror! – the same pair of shoes (black patent YSL Tribute pumps with six-inch heels; £490, in case you're wondering). Don't they call each other to co-ordinate, I ask? She smiles, shakes her head and sips her cranberry juice. Wasn't it mortifying to be seen sporting the same kicks? "No, it was fine. Those are classic shoes ...

"Simon said recently that anybody in showbiz is a peacock: you want to look good, you want to feel good, you want to get out there and do a good job, and for me clothes are part of that. Simon got rid of his high-waisted trousers, but I do still wish he would put in a bit more effort. You should walk in there as a judge and present part of the dream. We've been working in the industry a long time and that's what the contestants are aiming for."

Dannii was, in fact, famous in Australia before Kylie, courtesy of the much-loved kids' TV talent show, Young Talent Time, on which she appeared for seven years in the Eighties. "When they asked me to go on, my parents were very worried, because once you're in, you're in. Like the contestants on X Factor, it changes your life for ever. But it wasn't a question for me. I definitely wanted to do it."

The two world-renowned sisters also have a brother, Brendan, who is a year older than Dannii and a news cameraman. "He is a very down-to-earth guy," she says. "Kylie and I have a bad day when we put on the wrong shade of lipstick; he has a bad day when he's in a war zone watching a dead body float past him. We lead very different lives, but he's our rock."

The ups and downs of the music business must seem somewhat inconsequential to the whole Minogue family these days, since both Kylie and their father Ron won recent battles with cancer. As Kylie recovered, Dannii's best friend was dying from the same disease. "For so long there was a voice inside my head just screaming: 'Why?' And there really is no answer. So whether I'll ever get to a place where I totally accept it, I don't know. There's ups and downs. I definitely have days when I'm in that peaceful place with it, and days when I'm not."

At this point she starts to blink away tears, so we change the subject.

It was Kylie who first told her she should do The X Factor. "Before I was ever chosen to be on the show," she says, "Kylie had been telling me, 'You should do that, you'd be great at it'. And I thought, 'Are you kidding me?' But it feels right. I get great joy from seeing other people do well. My friends watch The X Factor, and they say it just lights me up."

It must be tough being a female judge on a TV talent show, I suggest. Cowell can roll up in jeans and a T-shirt, Louis Walsh and Len Goodman can shuffle along under the radar, yet Kelly Brook and Arlene Phillips get thrown to the wolves. Whether it's speculation over their futures, or examination of their relative ages, they can't escape the glare of the spotlight. Isn't The X Factor meant to be about the contestants? "It's just what fascinates people, I guess," Dannii says. "They'd probably struggle to get press coverage on, 'Is Louis coming back? And what's he wearing?!'"

In fact, the fashion war is a fairly tame example of X Factor tittle-tattle. When Dannii first joined the show there was her spat with Osbourne; last year she and Cole supposedly clashed, a story they've both since denied; and then there was her very public stand-off with Walsh, after both chose the same Take That song for their respective performers, and Walsh accused Dannii on air of having nicked it from his boy-band JLS. So tearful did she become that she could barely introduce her own act.

"I'm not made of steel," she says. "It got heated on and off set, and there's only so many times I can be pushed around. It got to the point where I had to defend my character. I'm sure the audience were eating it up, but it's different when you're actually in that seat. It was absolutely horrible. I would never want to go through that again, or see anyone else go through it. But it's what you sign up for."

At the time, perhaps surprisingly, it was to the media that she turned for solace. "You can't be objective about it when you're in it. So I went on a couple of the online polls to see what was going on – 99.9 per cent of the people were saying, 'This is utter crap,' and I thought, 'OK, now I can put it in perspective.'

"Louis was very sweet on the first day of work this year. He said, 'I'm so sorry, please don't let me do that again.' It's nice now to see the side of him that everyone else knows. He's just very honest and open and we've cleared the deck and been having a big giggle this year. I hope it stays that way."

Nowadays, Dannii spends six months of the year with The X Factor, and six months at home in Australia judging Australia's Got Talent, another of Cowell's shows, which she also joined in 2007. After last year's conflicts, however, it took some persuading to get her back into the X Factor seat – and a reported £250,000 pay rise (to £1m), putting her on a par with Cole. "This year there's a really good vibe between us," she says. "Last year it was clear to everyone that I wasn't having fun, and I made it very clear that if it was going to be anything like that again, then I didn't want to go there."

Among the many first audition performances to watch out for during the new series, she suggests, is "a really interesting guy with Asperger's. He came on stage and he was very particular about explaining his condition. He told us that because of his Asperger's syndrome and the fact that he'd been picked on, he hadn't left the house in seven years. But he just stood there calmly and told us that his singing teacher had been helping him to build his confidence. Then he started singing. You will not believe his performance when you see it." For anyone on the look-out for the new Susan Boyle, he sounds like prime viral video material.

The X Factor may have kept the same judging line-up, but the format is evolving none the less. After the huge success of this year's Britain's Got Talent series, Simon Cowell has introduced a live audience for auditions – something Dannii is used to from Australia's Got Talent. "But Louis was freaking out. I had to keep giving him cuddles to calm him down. Even though he's done the live shows, that's not his comfort zone. Whereas it's great for Cheryl and I, and Simon obviously loves an audience."

Dannii recently performed at Cowell's 50th birthday party, singing Carly Simon's "You're So Vain" with Walsh, Amanda Holden and Randy Jackson on backing vocals. There were once rumours that the pair were more than just friends, but Dannii discreetly ignores the subject when I mention it, saying cryptically, "I've spent some time with Simon outside the show". Perhaps she just means at his birthday party. In any case, she is now happily attached to the British model and former rugby-league player Kris Smith, seven years her junior.

One accusation levelled at Dannii – by Osbourne, of course, among others – was that she lacked the qualifications to judge a competition like The X Factor, that Cowell had only hired her for her looks. It's a touchy subject. "What does qualify someone for this job – 30 years in the music business; television, theatre, film? Surviving it without running off the rails like a lot of other people? You know, maybe I do have some of the skills to do it."

After taking the flak during her first series, it must have been satisfying to see two of her acts – Rhydian Roberts and Leon Jackson – taking the competition's top slots. Of course, it was partly the luck of the draw that she got to mentor a strong male category, but, said Cowell recently, "Dannii works harder than all of us. She's so obsessive about winning and I like that."

Dannii is initially reluctant to concur with this description, and I realise that admitting to an obsession with winning seems like an admittance that she'd do anything – even steal a song – if it meant she could snatch victory. Maybe Cowell's compliment was actually him stirring things up, as usual.

"I'm obsessive, but not about winning," she claims. "I'm obsessive about looking after the acts. I've been performing from a really young age so I really want them to have a good time. It's a lot of pressure, and I want to make sure that they're all fine. For example, there was a lot of nasty press about Rhydian saying he was weird. He wasn't weird, he's just passionate about what he does. Nobody ever saw the sweet side of him. They saw the electricity the moment he walked out on stage.

"Like a lot of performers, he was completely different backstage. Week one, he was crying to me on the phone, saying people were writing untrue things about him; his mum was in tears, his grandma was in tears. He didn't know if he could handle it. I said, 'Just get out there, the only thing you can do is perform as you do it.' And he did, then people started to warm to him. I worked hard at all of that coaching and emotional stuff behind the scenes, as well as choosing the songs."

I ask Dannii what she tells her performers when the X Factor roadshow has moved on. Most of them, after all, will end up back where they started. Jackson, 2007's winner, was dropped by Sony BMG in March. "There's a period afterwards when they can still get work from it, when people are interested. Not everyone's going to have Leona Lewis's success. But people can make a healthy living from performing after the show finishes if they're clever about it. I'm surprised Leon's album didn't work out. I remember, just before the final, Michael Bublé invited him on stage at Wembley to duet and it was magic. At that point, I thought, 'This guy is going to go on and do something.' "

'The X Factor' returns to ITV1 later this month