Billed as a documentary in which nothing is true, `The Falconer' is half-film, half-happening and constantly in flux. Chris Darke sheds light on the work of Chris Petit and Iain Sinclair.

There are alchemists at work in London's Goodge Street. In a side- street editing suite, Chris Petit and Iain Sinclair are musing over a Hi-8 video camera as Petit refilms Howard Marks off the monitor screen. As Marks is chatting amiably about Peter Whitehead (the film's subject), Dave McKeen, the graphic novelist, swoons over the re-filmed Hi-8 images. Saturated impastos of colour and solarised glares storm the tiny frame. The producer is stalking the suite. "Image fetishists," he hisses.

The opening titles of The Falconer describe it as "a documentary investigation into the lives and careers of Peter Whitehead" then follows up with the catch-all clause, "a film in which nothing is true (including this statement)". The fake documentary thrives on the anecdotal detour, the aside that appears to promise much but reveals nothing, the fruitless investigation. It's a discursive form, fact and fiction struck off each other in a whispering gallery of multi-layered images. And ideal for two writer/ film-makers pursuing a full-time fabulist like Peter Whitehead.

Who is Whitehead? Initially he comes across in the film as a "character", one of those numberless professional eccentrics that emerge via Shires Central Casting. At various and frequently overlapping periods, Whitehead has been an underground film-maker, a publisher, a novelist. He's bred falcons in the Middle East, is a former associate of Howard Marks and is married to James Goldsmith's niece, Dido. Sinclair describes him as "a John Buchan clubman/adventurer of the psychedelic generation". It's a description that points to Petit and Sinclair's fascination with him, as well as explaining some of their wariness, one that places Whitehead at that overlap between the worlds of high-class and bohemia that was a mark of the Sixties. This Sixties social triangle extended to bring charity-minded gangsters together with the more louche end of the Great and the Good (the Krays and Lord Boothby). This vision sees the Sixties as seething with social experiment and it's one of the decade's underlying myths. But what about those who Sinclair describes as "revenants" of the period, those with the good sense to have gone to ground early?

Sinclair calls them "the reforgotten", and there's the sense that he sees himself and Petit as emissaries for and archaeologists of the pulp novelists, left-field artists and the self-mythologising counter-cultural con-men. But are they themselves also part of this bunch? If Lights out for Territory, his collection of essays on London, bought Sinclair to chattering-class consciousness, he's continuing to burrow into the cultural hinterlands. Petit possesses a classic English voice - the voice at the other end of the phone in a spy film. It's the perfect way of narrating the Whitehead story, as Petit does, with the sound of one eyebrow raised throughout the tales. "I'll tell you the full story next time," is Whitehead's refrain. They dine together on an island in "a private restaurant; very expensive, very exclusive", and a helicopter crashes in a fireball outside. The diners are gawping out of the window and Whitehead, narrates Petit, "is looking the other way, smiling enigmatically to himself as if he knew exactly what happened. And very probably arranged it."

Petit and Sinclair worked together before on The Cardinal and the Corpse, a 1992 film for Channel 4 whose subject matter and cast of characters overlap considerably with the "hucksters, gash novelists and ex-Kray foot soldiers of Sinclair's novels' White Chappell, Scarlet Tracings and Downriver.

Their abiding obsessions are quintessentially British - the weather, landscape and spying. Or, more accurately, conspiracy theorising. They know it's high-class gossip with delusions to occult significance but it's the tone they use for The Falconer because it's the tone that a subject like Whitehead requires. American cinema returned to the conspiracy theory form recently in the Mel Gibson vehicle that advertised its intention to be both generic round-up and to franchise the form by actually calling itself Conspiracy Theory. The X Files was smarter in making conspiracy the initially creepy undertow to the Grand Guignol SFX but soon became a weirded-out Wonder Years' when it transpired that Cancer Man killed Kennedy.

And if, for the fledgling British Secret Service, spying was "the great game", we're well into injury time by now. Conspiracy theorising is the "sound of out-of-commission cold warriors traipsing back to the pavilion". But it's also the site where "fact copulates with fiction", as Whitehead puts it. In Petit and Sinclair's account of Whitehead they're drawn to the register of the conspiratorial and it works. "He was an occultist," explains Petit, "his explanation of the world was magical. Everything that happened could be revised on the instant to suit the pattern of his own will." But did they come to bury Whitehead or to praise him?

`The Falconer' will screen on Channel 4, spring 1998. Presented by Petit and Sinclair, it will also screen at the Watershed Arts Centre, Bristol, 28 January. Petit and Sinclair will be reading and screening at the Voicebox, Royal Festival Hall, London SW1 in `Straddling the Perimeter Fence', tomorrow, 7.30pm.