Daniel Craig gives an indepth interview about his life post-Casino Royale

For some fans he was too short, too blond, too Northern... yet Daniel Craig's 007 has made him the hottest film star of the year. But before you typecast him, his next role is as the gay convicted killer Perry Smith in the Capote biopic Infamous. Liz Hoggard of The Observer meets Liverpool's shooting star.

Walking around Shepperton Studios, strange creatures loom from the shadows. Witches and warlocks bowl past in hippy dreadlocks; I swear I've just seen a polar bear in full armour. The film lot is currently playing host to The Golden Compass, the first instalment in Philip Pullman's His Dark Materials trilogy, starring Daniel Craig, Nicole Kidman and child actor Dakota Blue Richards. By the time I reach Craig's dressing room, I've slightly lost touch with reality.

But as Craig enters the room there's that shock of recognition. Everywhere you go, on buses, on billboards, his face is plastered 60ft high. Overnight, he has gone from being a great character actor to the most famous actor in the world. To date, Casino Royale has grossed $417m worldwide, making it the most successful opening of a Bond film ever. And Craig is the man who has made Bond human, giving him enough interesting psychological flaws to compete with modern icons such as Jack Bauer and Jason Bourne.

So, indisputably it has been Daniel Craig's year - a story made all the more delicious by the fact that he started off 2006 as the potential villain of the piece. But those fans who complained he was too short, too blond and, yes, too Northern to play Ian Fleming's deadly assassin have had to eat their words.

We've met several times before, and I've always found Craig to be hugely bright and sympathetic. But there was always a sense of reserve. His wariness with the press - and especially of talking about his private life - could make interviews slightly combative. 'Self-promotion, for me, is like going to the dentist,' he once admitted.

But now everything has changed: his body language is open, he meets your gaze directly. A new energy crackles in the room. And he looks great, blonder somehow (mysteriously, Craig is one of those actors who can switch his blondeness on and off at will). He's dressed in corduroy and brogues to play Lord Asriel in The Golden Compass. Disappointingly, his new beard - 'my explorer look' - has already gone. 'I grew it for the beginning of the film because Asriel is holed up in a prison cell, so shaving it off symbolises his freedom.'

Daily, it seems, Craig is splashed across the front pages of the newspapers on the flimsiest of pretexts (he's got new facial hair, he's the new male totty or the saviour of British masculinity). It's harmless fun, but he knows things could turn darker. 'If someone in my past decides they want to write about me, there's nothing I can do about it. It's their thing, it's what they're going through. But if it's to do with my present group of friends, my family, then there is a need for some control to be taken because that's private.'

He cites JK Rowling as someone who uses her fame and fortune wisely. 'She's kept her privacy. I think she may have a child, but I don't know, which is good. Now she's using her money to fund things she believes in. But her charity is her own private thing, which I think is incredibly admirable.'

Growing up working class in Liverpool, Craig was arguably the boy least likely to succeed. He failed the 11-plus and left school at 16. He had the wrong look for drama school in the Eighties, which was full of boys in floppy fringes who went to Eton. And yet here he is, the biggest British movie star of the decade at 38. What does it feel like to finally be doing the circuit on shows like Parkinson? 'Exactly what you think it feels like,' he deadpans. 'I was reluctant to go on Parkinson actually, which is weird because when it came to America I was like, "Oh fine, I'll do Letterman, I'll do whatever." I had less fear about it because it's not my town. But suddenly you're at LWT in London and you're at the top of the fucking stairs. The band's winking at you, and all you can think about is not falling down those stairs. Parkinson is delightful though, he came and talked to me before the show, and I thought: "OK, I don't have an act, this is all I can do, this is it, sorry." I admire people who can go and just turn it on. But if I do that, I just look like a wanker. So I try and talk normally with people.'

But then Craig does have a horror of modern confessional culture. 'You watch the mess people get into when they invite people into their homes and say, "This is the stress I'm under at the moment because I'm breaking up with so-and-so, or my child is dying, or my mother is dying, and I'd like to share this grief with you, because it would be good for other people." It may seem a valid statement, but I can only see it damaging you. Later, people will say, "But you shared your grief with us when your cat died, what do you mean you won't talk to us now you've had an affair with so-and-so?"'

But he's savvy enough to know he can't play the reluctant movie star any more. 'At the beginning I said to the Bond producers: "I will do everything you want me to do to sell this film," because I can't do this movie and go "I don't talk to the press" - it defeats the object.'

So, just as he was being declared a major sex symbol Craig went the whole hog and outed himself as 'happily not single', declaring a girlfriend, 29-year-old film producer Satsuki Mitchell. Was that something they decided to do together?

'Definitely, definitely. The thing is, she's been with me all through this, and all the way through filming. So why exclude her? She's up to it; she's an adult, I'm an adult. I'm not going out there purposely holding her hand to say, "We're a couple." But Bond has been too big an experience, it might not come around again. We had to do that amazing thing in Leicester Square, and walk round all that craziness, just because it may never happen again.'

Craig is a little afraid of where this level of exposure might go, though. 'I knew what it would open us up to - God forbid we should split up, but the response will be "Ah ha!", and there's nothing we can do about that. Now that we've appeared publicly we've declared something or other.' Does he fear the curse of Hello!? 'There is something out there,' he hoots. 'I'm sure there is. There's an organisation where they sit in a dark room with hoods on.'

He has three new films due out in 2007: as well as The Golden Compass, there's The Invasion, a modern version of the sci-fi classic Invasion of the Body Snatchers, also with Kidman. But fans may well not recognise him in his next film. Infamous, directed by Doug McGrath, is a million miles away from Craig's suave 007 persona. Playing the convicted killer Perry Smith, who developed a homosexual relationship with Truman Capote, Craig has dyed his hair black, his skin is sallow and he wears contact lenses.

Daringly, he doesn't appear for the first 40 minutes of Infamous. 'But boy, the minute he comes in, he sure grabs everyone,' says McGrath. 'I knew Daniel was right because he is very persuasive violently, very persuasive as a vulnerable person, but he is also totally magnetic. As Perry, you think is he dumb, or much smarter than I thought, which keeps you on a knife edge.'

Infamous, which stars British actor Toby Jones as Capote, recreates the background to Capote's 1965 true-crime tale In Cold Blood. By rights it should be laden with Oscar nominations next month (both Craig and Jones are astonishing). Except for one problem: this is the second film about Capote to be released in 12 months (Bennett Miller's Capote won Philip Seymour Hoffman an Oscar earlier this year). So how do you get audiences to a film they think they've already seen?

Craig is so proud of the film he's made a window in his schedule just to talk about it to The Observer. 'My feeling all the way along was I wish they had put the two bloody films out together. I wish they'd had the balls to do that,' he insists. 'I love Truman Capote, and I love In Cold Blood so much, I thought, "You know what, whatever happens, this is worth telling." It's worth seeing another interpretation of that character.'

Initially McGrath's film seems lighter, frothier than Capote. We meet Truman's swanky Manhattan friends, from Babe Paley (Sigourney Weaver) to Diana Vreeland (Juliet Stevenson). As Weaver puts it: 'If the other film is like a shot of bourbon, then this is a glass of champagne.'

But after Truman meets Perry, the tension starts to bite. Artist and murderer are mirror images. Both had mothers who committed suicide. Both were sensitive kids who felt out of place and had dreams of becoming artists.

It's too easy to call Infamous a gay love story, but the erotic tension between Craig and Jones has you on the floor. 'There was never any self-consciousness about it,' says Craig. 'I always think that's how a love story needs to play out anyway, because it's just this friendship that starts growing, and if it turns into sex, it turns into sex; but it's not like two young men meet in a bar, go out back and fuck. This is about two human beings really sitting down and trying to figure each other out.'

Nevertheless, poor Toby Jones has been hounded by the American press about what it was like to kiss the new 007. A fact Craig finds grimly amusing. 'What's he supposed to say? "Very dry?" Anyway, it's all over the internet now: "Bond has gay kiss!"'

Infamous nearly wasn't released, but Warners relented when it was shown at the Venice Film Festival to rave reviews. In fact, Craig stayed away from the film festival, citing prior commitments. Now he admits, 'I had this whole awful debate going on with myself. I thought, "I can't go because otherwise it will be all about the new Bond being in town.'

He loves the fact that Infamous is about a writer, not a celebrity chef or an actor. 'Some of my greatest heroes are journalists. I genuinely believe getting to know people, going out and looking people in the eye and understanding the situation, like war reporter Robert Fisk does, that's proper journalism. Maybe that's just a dinosaur way of looking at things. But I don't believe anything I read on the internet.'

He'd love to do more theatre: 'I'm enormously jealous of what Bill Nighy is doing at the moment.' Judi Dench is another role model. 'Bond is a sexist pig, of course he is. But having Judi in the film, well it doesn't forgive it, but it gives it gravity. Because how could Judi Dench be wrong?' I tell him it was a master touch that in the film M lives in a sleek modernist penthouse, not some rose-covered cottage. 'Yeah, and it's great there's some guy in bed with her. I was desperate to get someone in like Brad Pitt or Keanu Reeves to do it!'

Craig never took any notice of box-office receipts before Bond. All that changed with the first opening weekend. 'Watching the numbers coming in, and it steadily going up, I thought, "It's OK, we've got away with it." It was like the fucking Blue Peter appeals.'

He's thrilled the two films making money this Christmas are Casino Royale and Happy Feet. Though I don't think they're ever going to make a marketing man of Craig. 'There's this whole thing about demographics,' he groans. 'We're told, "OK, we're a bit low on 22- to 28-year-old women at the moment." What am I supposed to do? Go on telly and make bread?'

And yet you sense how passionately he gets involved. He and director Martin Campbell had a few bust-ups on Casino Royale. He's also working hard to make sure Pullman's subversive text is not watered down too much in The Golden Compass. 'I'm clinging on to it with my fingernails,' he observes. 'I was in Rome promoting Bond the other day and we got asked quite a few questions about The Golden Compass. The thing is, having spoken to Philip [Pullman] now at length - he's such a passionate, great guy - there's nothing anti-religious about this film. It's anti-establishment in a big way and anti-totalitarian and anti-controlling. But essentially it's a film about growing up, and how difficult that can be.'

Craig (who has a 14-year-old daughter from a previous marriage) is relishing playing the magnetic but selfish Lord Asriel, who comes across as a thoroughly rubbish parent in the Pullman books. 'I'm a bad dad,' he gloats.

In fact, he sounds pretty paternalistic. He worries that today's teenagers are growing up too fast. 'Nowadays, free time seems to be 10 times more complicated than it was ... there was less to think about for us. Although Sunday night was all about recording The Chart Show on the radio, it was a major technical deal,' he chuckles, 'so it was probably just as stressful as downloading something from MySpace. It fills the same hole in your head, doesn't it?'

Craig may be man of the year - 'Stop saying that' - but for an action hero he's spending a lot of time indoors. 'The truth is I can't really go out at the moment. I can walk round Soho, anyone can walk round Soho, and it's OK in New York. But I just get shouted at. He yells suddenly, imitating the male fans who rush up to him. 'It's not anything bad, and it will die down eventually. And if it stops me walking into too many bars, that's no bad thing.'

He's no time for self-pity. 'It's a great business this. If you work really hard and get it right, then it's incredibly rewarding.' But he's thrilled many critics didn't recognise him in Infamous. 'I may have to wear a longer wig and more teeth in the future. Ah well,' he laughs, 'there's a plastic bag with my character hanging around in it somewhere.'

One senses he'll use his mega-fame to get interesting films green-lit. 'There are a couple of things I'm going to do next year,' he tells me enigmatically as he dashes back on set, 'and they're small and they're independent and they're about movie-making. There are hugely positive things out there which I'm going to grab with both hands. If more people go and see Infamous now because I'm James Bond, that's great. But people should go and see it because it's a wonderful movie.'

Thanks to `beano` for the alert.

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