As the Royal Academy's current show celebrates the Victorian age's fascination with fairies, Andrew Lambirth talks to Peter Blake, an artist who is unashamed to admit that he still believes in them.

The man who so memorably designed the Sgt Pepper album cover and pays such devoted tribute to the likes of Elvis Presley and Marilyn Monroe, is convinced that fairies exist. He has painted several of them, imaginary portraits of Titania and Puck from A Midsummer Night's Dream and various flower fairies. If not children, they tend to be female, either portrait heads or nearly naked and extravagantly breasted.

There is a lambent sexuality to these images, an edginess not far from the surrealist frisson, yet verging on innocence rather than lubriciousness. There is also a delicacy of touch, a useful juvenescence of imagery matched by a meditative distancing, that distinguishes these other-worldly portrayals. Blake's fairy paintings are as oddly disquieting as the best the Victorians could throw at us.

"I was always interested in illustration, and the fairy illustrators Rackham and Dulac and Maxwell Parrish, from very early on in the Fifties. I had a big collection of illustrated books. But I think what triggered painting fairies was the birth of my daughter, Liberty, in 1968, and the idea of moving to the country. Suddenly I was making pictures for her."

This was the period when Blake and a group of like-minded fellow painters set up the Brotherhood of Ruralists, in conscious emulation of the Pre- Raphaelites. (Blake himself bears an uncanny physical resemblance to Dante Gabriel Rossetti.) "Having a daughter made me think, did I want to believe in fairies?" It was a conscious choice: because Blake was never persuaded of their non-existence, he chose rather to believe.

"When I first started painting fairies, I thought very carefully about them and made lists of their characteristics. I decided - and this I find to be traditional - that any gradations would be in size rather than in wealth or class. So Titania and Oberon would be the biggest and their courtiers would be slightly smaller, going down to the very tiny little fairies who were the equivalent of workers, I suppose.

"I was living in Somerset by then, and I worked out that, if they lived anywhere in the village, they'd live down by the river. I worked out a way that they'd probably dress. Titania is wearing boots made from dockleaves tied round her ankles. And anywhere that can be decorated is - her pubic hair is plaited and daisies are entwined in it. She's wearing a necklace made of grass and a grass belt round her waist from which are hanging various bits that she's found: an old spark-plug, a piece of glass and a toy."

Blake deliberately made the painting very much of its time, not some kind of antique vision of playful sprites. The sense of otherness is balanced by the here-and-now solidity of the depiction.

Where does his inspiration come from? I ask him whether the portraits of Titania, for instance, were based on a real person or invented. "At that point I was often referring to a photograph of Twiggy's face, so certainly some of the features are Twiggy's, though it wasn't meant to be her, and it's certainly not her figure. But the mouth may well be Twiggy's. I rarely work from models."

What about other artists? "The fairy painters I knew about were Noel Paton - I knew both the Titania and the Oberon pictures in Edinburgh very well, in fact I've got a drawing by Paton of Titania's head - and I knew Fitzgerald and Richard Dadd. I suppose I knew the pictures that were available and made it my task to find out more about them. I would go to the Maas Gallery and look through their stock for drawings. I almost bought Richard Doyle's The Fairy Tree at one point for pounds 3,000, if you can believe it." (It must be worth a hundred times that sum now.)

Blake's chief portrayal of Titania has changed considerably over the years of its evolution and it has been exhibited in different forms. "It became a kind of concept - the idea of showing a work developing. I must have showed it seven or eight times in different versions." Blake finds it notoriously difficult to finish paintings; they have virtually to be wrenched from his grasp. Even when sold, he will try to get them back to the studio to continue working on them.

"The other interesting thing about Titania is that the spectator gets involved in the picture. As the fairies ooze to the front of the picture, they hear the person who's looking at the picture and they stop and look out. A group of them stare straight at you, involving the viewer."

There is, in Blake's mind, a whole repertory company of characters who are capable of adapting to any role, ranging from strippers to wrestlers. "There was quite a fad for fairies in the Seventies. There was a sudden resurgence of interest and two or three people did books on gnomes and fairies, but it was almost on a gift-shop level." Blake's images were always more substantial and serious; he painted a series of flower fairies and aqua fairies and seaweed fairies, and they replaced the strippers as his primary girl-subject.

Are they moral or amoral? "I think fairies become a vehicle for what we want them to. If you want the concept of a naughty fairy, you read it in. The beautiful girl fairies tend to be good, I think. There's an edge of magic realism to them. The fairies I paint have the ability to make magic. Painting is the only medium in which you can really make magic - you can't in film or in any other medium."

When Blake returned to London in 1979 and ceased to be a Ruralist, he nevertheless reaffirmed his belief by painting the wonderfully titled I may not be a Ruralist anymore, but this morning I saw a Fairy in my garden in Chiswick. That was really a statement for the critics, but it stands as a personal credo as well. He still believes.