Peter Gabriel, The O2, London

An old master strips back the covers

The last time we saw Peter Gabriel, he was 50ft in the air, scuttling upside-down in a harness around a circular track, having shortly before bowled about Wembley Arena inside a giant see-through Zorb ball. So it's hard not to feel a tad short-changed to find his latest concerts involve the singer, dressed in monkishly nondescript black and grey, just standing there on stage, singing. OK, so he has a massive orchestra behind him, but all the same...

As it happens, "all the same" is fairly apposite in the context. The show is based on Gabriel's recent Scratch My Back album, on which an interesting selection of cover versions – from Bowie's "Heroes" to Bon Iver's "Flume" – are performed to daring new orchestral arrangements which have the overall effect of transforming the material into either hymns or elegies. The songs' original peculiarities – in most cases, the result of their creators' idiosyncrasies – are smoothed away to leave a largely undifferentiated ground upon which can be inscribed the sombre new interpretations, all of which occupy the same small emotional bandwidth.

It's an impressive demonstration of how an artist can bend material to their own ends, and some of the individual orchestrations are undeniably impressive, opening up hitherto unglimpsed dark passageways of meaning. But the overall effect is, not to put too fine a point on it, pretty glum; less Saturday night than Sunday morning. And experienced amidst tens of thousands of adoring, attentive disciples of the angel Gabriel, the effect is rather like attending a high-tech cathedral service, albeit a cathedral that uses cheesy nachos and beer as communion wafers and wine. The few whoops and hollers that dare disturb the religiose atmosphere sound like isolated members of the congregation talking in tongues, when really all they probably want is not salvation but "Sledgehammer" or "Solsbury Hill". Certainly, when the latter arrives late in a second set devoted to similar revisions of Gabriel's own back catalogue, the joy is fairly unconfined around the arena.

But when the new arrangements, performed with the New Blood Orchestra under the baton of Ben Foster, work at their best, the effect is utterly transcendent. Eradicating the township-jive bounce from Paul Simon's "The Boy in the Bubble", for instance, leaves its troubling apprehension of contemporary life more exposed, while the gently sawing strings and aching brass sonorities applied to Elbow's "Mirrorball" seem to inflate the piece with oddly fitting all-American echoes of minimalism, Copland and Gershwin. And the moment when the pitch of hysteria reached in the orchestration of Arcade Fire's "My Body Is a Cage" suddenly evaporates to leave a lone clarinet wanly carrying the melody is a brilliantly theatrical touch that helps release its smothering grip. Gabriel's most arresting vocal performance, meanwhile, is reserved for Regina Spektor's "Après Moi", when his stealthy, covert delivery peaks with unearthly ululation in a piercing high register.

The album's most impressive refurbishment, however, also provides the concert's high spot. Accreting gradually from a tangle of hesitantly circling violin notes, Talking Heads' prescient peek into the mind of a suicide bomber, "Listening Wind", is rendered all the more tragically haunting, as if the intervening three decades of hindsight were being made to weigh heavily upon its shoulders. It also features the most potent visual presentation of the various animated backdrops and light displays, when a mesh screen is lowered in front of the three figures – man, woman, child – shown on the rear screen, briefly depicting them as they would appear on one of those new airport scanners: naked, vulnerable, but no longer quite human.

Following the intermission, the second half of the show opens promisingly with a "San Jacinto" in which marimba, piano and gamelan percussion provide a subtly stippled bed, over which staccato woodwind flutters like birds. But Gabriel's shining of a solo searchlight around the audience seems like a futile attempt to achieve intimacy in a huge arena. Likewise, his introduction of key personnel during "Downside Up" has the unintended effect of bringing to mind The Bonzo Dog Doo-Dah Band's immortal "The Intro and the Outro", a touch of levity the show could perhaps have more profitably mined. The Count Basie Orchestra on triangle? Yes please!