Imagine a bar so cool you wanted to live there...

The vibe? Jazz, reggae, Latin, blues. The performers? Elvis Costello, Deborah Harry... Phil Johnson drops in

Elvis Costello, who acts as the narrator, refers to it, rather hesitantly, as "a jazz oratorio". Roy Nathanson, its principal creator, talks about the influence of Italo Calvino's fabulist novel Invisible Cities. Blondie's Deborah Harry, who plays "bartender to the masses, lover to the fortunate", has had to arrange a substitute for her off-Broadway role in Sarah Kane's play Crave, in order to perform in its British premiÿre at the Royal Festival Hall. The "it" is Fire at Keaton's Bar and Grill, an extraordinary work somewhere between opera, performance art, and a concert, where the music mixes jazz, blues, Latin, tango, reggae and pop, sometimes within the space of the same song. Presented as part of the Racing Green London Jazz Festival, it will be a very hot ticket indeed, whatever you choose to call it.

Elvis Costello, who acts as the narrator, refers to it, rather hesitantly, as "a jazz oratorio". Roy Nathanson, its principal creator, talks about the influence of Italo Calvino's fabulist novel Invisible Cities. Blondie's Deborah Harry, who plays "bartender to the masses, lover to the fortunate", has had to arrange a substitute for her off-Broadway role in Sarah Kane's play Crave, in order to perform in its British premiÿre at the Royal Festival Hall. The "it" is Fire at Keaton's Bar and Grill, an extraordinary work somewhere between opera, performance art, and a concert, where the music mixes jazz, blues, Latin, tango, reggae and pop, sometimes within the space of the same song. Presented as part of the Racing Green London Jazz Festival, it will be a very hot ticket indeed, whatever you choose to call it.

By way of explanation, it's probably easiest to start with the album of the show, which has already been released by Six Degrees Records. Over 12 songs, a large cast of musicians and vocalists enact the story of a mythical bar - a kind of beatnik intellectual's version of the tavern in Cheers - where the lost, the lonely and (don't ask) the physicists gather in search of pleasure and companionship. At some point there may or may not be an actual conflagration (the fire of the title); meanwhile, the barflies content themselves with making merry and making music. It's an irresistible idea for everyone who carries the platonic ideal of that perfect bar where they can find their true self in the company of like-minded strangers, cocooned from the cares of the outside world. Over jazz ballads, doomy tangos, saxophone quartet dirges, and the sort of flip, hip, songs enshrined in a century's worth of lovelorn standards, the players reveal their hopes and fears.

Written by Roy Nathanson (the co-founder of the similarly unclassifiable group the Jazz Passengers, with whom Deborah Harry performs regularly, and in whose company Elvis Costello has previously guest-starred), in collaboration with lyricists Ray Dobbins and David Cale, a semi-staged concert version of Fire at Keaton's Bar and Grill was put on earlier this year at St Anne's Church in Brooklyn, where it received rave reviews. Exactly what form the London staging will take, however, was still uncertain when I spoke to Roy Nathanson in New York last month. Harry and Costello will definitely appear, although whether the video projections used at St Anne's will follow them depends on the budget.

Satisfyingly, the fictional bar of Keaton's is partly based on a real one, an unnamed tavern in Charleston, South Carolina, where, in the early 1980s, Nathanson played for one night in a band led by the legendary Hammond-organist Charles Earland, who is featured on the recording, but has sadly since died. "Me and the trumpet player were the only white guys in the band, and we played this place in Charleston where, although there was some racist stuff going on outside, inside it was just great, a collection of all the people who didn't fit in, black and white, gay and straight. The juke-box had the Clash and Coltrane alongside bar-music. It was smart, with intelligent conversations, and so heavy and so beautiful, and we played great. I was in my twenties then and playing was all that mattered, and I always remembered that place; I even thought that I would like to live in it. At that time I had had no experience of fire, but I thought, 'Let's set up a tragedy that I don't have a personal relationship with', because I wanted it to be outside myself. I'd also seen that Eugene O'Neill thing about the bar [ The Iceman Cometh], and Kennedy's Children, a lot of plays. I thought this bar was a good set-up, and I was in love with Calvino. This could be a bar version of Invisible Cities. Everyone could take a different idea about the bar, and we would weave it together to create one that was a composite of all this, which is how it turned out."

Elvis Costello, who rang me from Ireland to talk about the project, could hardly contain his enthusiasm. "From my point of view, this all stems from my work with the Jazz Passengers", he said. "When I directed the South Bank's Meltdown season, I asked the Passengers to open it, and met Roy for the first time. They said: 'As you're going to be there, why don't you sing one or two things?', so we did a few arrangements and I sang on their next record, with Deborah. Little by little we progressed, and then Roy started on this Fire thing, which he'd been working on for some time, and I got involved. The St Anne's thing in Brooklyn was one of the great gigs. I couldn't get a sense of the whole until the dress rehearsal. It just got more and more of a piece, and by the end it was one of the most enjoyable things I've ever done."

As for Deborah Harry, with whom he shared some of the highlights of the punk and new-wave era, Costello is a fan. "I sort of knew her, because we were in the charts at the same time, but when you're on everyone's wall like she was, I think it's really difficult. She's done this incredible thing to create this second career. Although you get people criticising, they're not listening: she's the real deal. There's no affectation, and even if you go back and listen to the Blondie stuff, you realise what an amazing voice she had and how much depended on it. She's really a virtuoso singer."

Costello - who, these days, is involved with his own, similarly beyond-the-pop-pale projects, having just completed composing the music for an Italian dance version of A Midsummer's Night Dream - is also impressed by the craft of Fire. "The words are so beautiful, and I love the way the text falls," he says. "It's poetic in the best way. They're not like your typical song lyrics, and they're not trying to be poetry either, or hitting you over the head. It's very soulful, and in Brooklyn it was done very gracefully. I came out with this sense of tolerance for different types of life. It will mean different things to different people, but it's a piece you can go back to. There's such a wide range of expression, and with the cast you get the idea of actually being in that kind of place." How they manage to turn the RFH into a little neighbourhood bar remains to be seen, but it seems worth finding out about; hopefully, you'll be allowed to sink a few drinks, too.

'Fire at Keaton's Bar and Grill': Royal Festival Hall, SE1 (020 7960 4242), 14 November