Edinburgh Festival: Strictly opera, strictly magical: Britten meets Baz Luhrmann in Australian Opera's A Midsummer Night's Dream. Antony Peattie is enchanted

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Occasionally at the opera, the impossible happens and the art form itself seems to make sense. Such events are worth noting, because they are rare and encouraging. After the success of his film Strictly Ballroom, Baz Luhrmann's production was eagerly awaited, but expectation can breed disappointment. The miracle happened in the British debut of the Australian Opera, which came all this way for just two performances. It was an ensemble success, a triumph for the company as much as for individuals. The hilarious farce of 'Pyramus and Thisbe' brought the show to a halt more than once. But Britten ends on a different note, with the beautiful chorus sung by the fairies and by Oberon - as though to re-establish music's primacy. Here there was no production number: the singers stood immobile in the middle of the stage, faced the front, and sang - wonderfully. It moved more than one member of the audience to tears.

The conductor Roderick Brydon and members of the Scottish Chamber Orchestra played from the first floor of a bandstand on three levels, dressed in scarlet tunics and black berets. Thanks to the conductor's tact, their position behind the singers and the reduced orchestration, much more of the text was audible than usual. There were some losses, in terms of instrumental colours, but gains too, as solo lines became more prominent. In this of all operas, where the differences between the various classes and species of characters are reflected in the orchestral groupings, it was an asset. Television monitors positioned on the front of the dress circle ensured that coordination between musicians, conductor and singers was good. Since the singers' voices and attention were directed upwards, they communicated with the whole of the Festival Theatre, rather than just with favoured patrons in the stalls.

The bandstand belonged onstage, because this Midsummer Night's Dream was set in India under the Raj. It was a solid Victorian affair, with a suggestion of native flavour in the dome, as though a pavilion, or even a religious temple, had been colonised for another purpose. Characteristically, the architecture expressed the two coincident, interactive levels of the opera's action - mortal and immortal. Throughout the evening, sacred and profane mingled, with the sublimely disconcerting assurance of a cow redirecting heavy Delhi traffic.

Athens was the West, the world of rational daylight, while the four quarrelling lovers were English settlers, dressed in cream linen and jodhpurs. The wood was the East - shadowy, unpredictable, magic. Tytania wore a sari, the excellent fairy children (described as 'Gopies' in the programme) wore pink body-make-up and their eyes were rimmed with blue kohl. Puck was an avatar of mischievous, blue-skinned Krishna, while Oberon was more fiercely, eccentrically awesome, with dreadlocks that fell to his waist and long, glittering fingernails. The visual feast represented a tour de force by the designers Catherine Martin and Bill Marron, but it was more than a decorative device. For once, the unreal was real; instead of make-believe, we had somebody else's belief. The supernatural in A Midsummer Night's Dream demands to be taken seriously. Here, various borrowings from Hinduism and Buddhism compelled respect. As Puck, Tyler Coppin exerted as much control over the audience as over the humans on stage. Michael Chance gave an exemplary performance as Oberon, his apparently effortless, silken vocal line the embodiment of grand authority. Enraged, he was genuinely frightening. As Tytania, Kathryn McCusker floated her treacherous, high-lying phrases with grace and ease.

The four lovers were nicely differentiated in character and strongly cast - in particular, the willowy, lyrical Lysander of Ian Bostridge and Paul Whelan's virile Demetrius. The rustics, or mechanicals, were wholly credible as a bunch of soldiers bent on amateur dramatics amidst alien surroundings. Again, the individuals were well characterised - Gary Rowley's Bottom, with a silk cravat to match his linguistic pretensions; an inhibited Flute, played by Michael Martin as Charles Hawtree blossoming into a radiant Thisbe and an excellent, distinctively Australian Wall (Snout) from Graeme MacFarlane. None of this was accidental: the humour worked because it corresponded in detail with Britten's score and reflected its homage to old music-hall routines.

As Strictly Ballroom demonstrated, the director Baz Luhrmann is not afraid of formality. For all its street credibility, that film revelled in baroque elaboration. One of his strengths in opera is that he feels at home with the form itself. He doesn't need to pretend that a duet is an unsatisfactory dialogue, for example. He used the stage's symmetrical staircases to dramatise the canonic form of the lovers' quarrels. But this ease with artifice goes hand in hand with intense feeling. When Bottom was transformed into an ass, he became genuinely asinine and unexpectedly, but rightly, sexy. The many special effects, the joss-sticks burning sandalwood, the fireworks on stage and confetti over the audience expressed a rare generosity of spirit.

Baz Luhrmann's 1990 Australian Opera production of La boheme was filmed in 1993 - though not by him - and has been released on video in Australia by ABC. It should be shown on television here. There too, he used different levels on stage - a ladder, scaffolding - to dramatise relationships. The performances he drew from his young cast were distinguished by passionate, unselfconscious physicality and sincerity. He needs, or perhaps needed, to beware the specious allure of chic: his Rodolfo and Mimi (David Hobson and Cheryl Barker) were extraordinarily handsome, but she rivalled Musetta in the glamour stakes. This was the first Mimi to dress better as a modest seamstress in Act I, than as a 'protected' lady in Act III.

Experience of this Dream makes one keen to see other works in the repertory of the Australian Opera that reflect the company's enterprising casting policy, such as the Orphee et Euridice that marked Stefanos Lazaridis's debut as a producer and the Julius Caesar directed by Francisco Negrin. Could the Edinburgh Festival bring this company back for a longer visit next time? We need to be reminded that miracles happen.

'A Midsummer Night's Dream' is at the Edinburgh Festival Theatre; last performance tonight (Booking: 031- 225 5756)

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(Photograph omitted)