Donatella Versace: Prima Donna

He loved art; she preferred diamonds. He loved to do business; she liked to party all night. Gianni and Donatella Versace were the devoted but very different siblings who revelled in the outrageous trappings of his incredible success. Then came the murder that thrust her to the head of the billion-dollar family firm. Susannah Frankel meets fashion's formidable first lady

Donatella Versace sweeps into the room a fashionable 30 minutes late, flanked by her hairdresser and preternaturally handsome personal assistant, Bruce Guimar.

Despite the fact that she's wearing spike heels a good six inches high, she is tiny, positively dwarfed by her ever-present and hugely attentive escorts. She is wearing a skin-tight black Lycra vest and equally unforgiving black trousers. She has the body of a particularly well cared for 25-year-old. Her skin is the colour of caramel and her trademark platinum locks - dutifully teased into glossy waves for the occasion - reach down to her waist.

Strategically placed at various points about the suite on the top floor of the Dorchester Hotel in Park Lane, London (where she is, for the time being, resident), are packets of Marlboro Red - the lady doesn't do lights - each wrapped its own, specially printed black and white paper case bearing the signature Versace Baroque swirls and her "DV" personal insignia. She does this, she says, in a treacle-rich voice, "because I 'ate the warning".

"We normally print them in the colour of the season," Guimar adds, as if that were the most natural thing in the world, "but we ran out." By the side of each pack is a lighter in an ice pink or blue crystal case and finished with the gold Medusa head that has, equally, always been an integral part of the Versace identity.

On a table in front of us are bottles of water and strawberries dipped in white chocolate. Cakes - so small, shiny and perfectly formed that they look like they've been varnished - sit on silver platters alongside, although, as is usually the case in such circles, they are destined never to be touched.

Versace is in London for cocktails and a dinner given by her friends Elizabeth Hurley - she of the Versace safety-pin dress fame - and David Furnish at the latter's Holland Park home to celebrate the publication of the latest issue of British Elle. Donatella has guest-edited the magazine, central to which is an auction of clothing and accessories donated by every fashion brand worth its credentials - from Burberry to Chanel, and Paul Smith to John Galliano - in aid of the Breast Health Institute's Fund For Living.

"We think that breast cancer is something that's already taken care of," Versace says, "but it's not true. The women being diagnosed are getting younger and younger. Every two minutes, in the world, a woman gets sick."

This particular initiative takes care of women who already have breast cancer and need money to pay for someone to look after their children while they have treatment, for example. It has been running for some time in the United States but is new to Britain. It is based at Guy's and St Thomas' hospitals in London. "I think if people are able to make a noise, they should," Versace says. For a week in October, 10 per cent of the profits from every one of the 200 Versace stores the world over will be donated to the charity.

Donatella Versace's public persona - the supercharged and impenetrable blonde, dripping with diamonds the size of boiled sweets, whose extravagant lifestyle decrees that her feet never touch anything as unsavoury as a pavement devoid of a red carpet, say - is deceptive. In reality, she looks much softer than she does in photographs. She has pretty, brown eyes, and the great care her retinue takes of her is exceeded only by her own willingness to please and ensure that anyone in her presence feels comfortable. Her manners are immaculate.

"I've had to fight a lot to overcome my fears in life," she says, lighting up the first of many cigarettes. "To be Catholic puts a lot of fear in you. It's a great religion but also one that can limit your experience. You fear experience because everything is a sin.

"I am Catholic but I don't believe that there are so many sins in life. You need to live and experience for yourself what is and isn't sinful. Nobody can protect you from yourself. Yes, I believe in God, but I don't like all the guilt."

At 51, it would not be overstating things to say that Versace's life story to date has all the richness of the finest Renaissance drama. It is certainly more emotionally charged, more opulent and, of course, darker than most of us might ever wish for - or indeed dread.

She was born in Reggio di Calabria in southern Italy. Her mother Francesca, a dressmaker, died when her daughter was just 20. Her father Antonio was, by all accounts, a rather remote figure. Although Santo was the eldest of the Versace children, the significant relationship was always the one between Gianni, the fashion deity who presided over the 1980s and 1990s like a colossus, and his little sister. They were inseparable. Gianni once famously said: "If I was to marry, I would look for a girl like Donatella. Our friendship was from when we were children. We were always together. I can be in China or on the moon; we'll still speak one hundred times a day."

Throughout her childhood, Gianni's influence over Donatella was all-pervasive. Even her hair is his legacy. "I was 11," she told me when we first met, eight months after his death. "Gianni brought a friend of his to the house and he was a hairdresser. We had to hide him from my mother. He put in a few highlights but nobody noticed." With a predilection for a less-than-demure appearance clearly already established, Donatella was "furious. I thought, 'What's going on here?' He said, 'I don't want to do too much. I want it to be subtle.' But I wanted to do it properly, so I kept adding to it and adding to it..."

In the late Seventies, while Gianni was making a name for himself in Milan, Donatella studied literature at university in Florence. "My mother didn't want me to be in fashion," she says today. "She was in the fashion business, so was my brother, and she thought it was too crazy for me. She wanted me to be married with children, to be independent, yes, but not to have a crazy life."

Strong-willed from the start, however, Donatella studied during the week, then travelled to Milan at weekends to help out in her brother's studio. In 1979, when she was already designing accessories for the Versace label, she met the American model, Paul Beck. They were married in 1983. They are now estranged, but Donatella has said: "We are civilised people," and they maintain a sense of family. Beck is the father of her two children, Allegra, 20, and Daniel, 15.

It was, of course, during the 1980s that the Versace label rose to worldwide prominence. The heady mix of black leather and metal mesh, the blinding colour and skin-tight fit of Gianni Versace's clothing encapsulated that era perfectly.

Donatella wore the clothes and lived the life to the full. The enduring image of the label's allure is that, after the release of George Michael's "Freedom", at the 1991 autumn/winter Versace show, Linda Evangelista, Cindy Crawford, Naomi Campbell and Christy Turlington, all of whom appeared in the video that accompanied the single, came out on to the catwalk together, lip-synching the lyrics to a booming soundtrack. The high-octane glamour and open flaunting of wealth and fame that had become synonymous with the Versace name had reached its peak. Donatella was with Gianni all the way, criticising him openly when she thought it was needed, and ensuring that, while he dreamt up ever more elaborate and scene-stealing collections, he moved with the times.

She has long been described as his "muse". Her retort is typically feisty: "This is not very amusing." She knew then - as she does now - that she meant rather more to her brother than that. Gianni Versace collected art; Donatella preferred diamonds. He was restrained, even rigorous, in his habits; she partied with their friends until dawn. He mixed with painters; she courted rock stars. They were perfectly suited to one another, she says: two halves of a winning formula, if you will.

"I am very outspoken, very opinionated," she says. "I like to have fun and fun, all the way. There's no middle ground. That's just my personality. I also like to share good times with my friends. Gianni liked all that, but as soon as he was sure that people around him were having a good time, he was like, 'OK, you take care of them, I'll go to bed.'

"He was more reflective. He wanted to know everything about my world; who I was seeing, who I was talking to. He was curious. And I wanted to know everything about his; what he was reading, which artist he was meeting. We were perfect together in that sense."

In July 1997, the gilded existence that brother and sister shared came to an abrupt end when Gianni Versace was shot dead at the door of his Miami mansion. Half of the company that bore his name was left to Donatella's daughter Allegra, 30 per cent to Santo and 20 per cent to Donatella. "I want to leave everything to your daughter," Gianni once told Donatella, "because I want to make sure you take care of her well."

Although Santo had always looked after the business side of things, it was Donatella who was forced into the spotlight as designer and figurehead of one of the most famous fashion labels in the world. Unsurprisingly, such responsibility took its toll. Her first collection won favourable reviews, but as she is the first to admit: "Whether they were good or bad, I knew people would forgive me everything." The fashion industry is not noted for its loyalty, however, and by the time the new millennium dawned it was widely considered that the Versace label had lost its lustre. Flesh-revealing, star-spangled clothing was past its sell-by date. What's more, with fashion companies the world over being snapped up by luxury-goods conglomerates and expanding ever more voraciously into the money-spinning accessories and fragrances market, the family-run Versace empire, with its statement clothing and hugely extravagant display of personal largesse, was anachronistic to the point of folly.

If, in 1997, Versace boasted sales of $558m, by 2004 the company was facing a debt of $120m. Donatella's personal demons were no less catastrophic; in September that year she announced to the world that she was undergoing treatment for addiction to cocaine. She emerged several months later, clean, serene and, perhaps for the first time since her brother's death, physically strong and happy enough to start work again and turn things around.

The company has employed the services of a new chief executive, the bespectacled and highly businesslike (read determinedly un-Versace) Giancarlo Di Risio, formerly of Fendi (owned by LVMH, Louis Vuitton Moët Hennessy). Di Risio worked with Versace 20 years ago and has a more profound understanding of the nature of this particular business and the personalities involved than most people.

"We argue, but we argue politely," Donatella laughs. "And we find solutions for things. Together." Such solutions have, by now, included forthcoming expansion into the Far East, remodelling the interiors of Versace stores, and selling off at least some of the family's assets, including Gianni's home in Miami, his house in uptown New York and part of his precious art collection, although Donatella insisted on keeping his favourites.

Most important, there is the more pared-down, contemporary nature of the clothes themselves. Of course, such things are relative. "Even if I wear jeans, I look glamorous," Versace says. "I have sweatshirts, of course. But they are very well fitted, you know." It would be safe to say, though, that the still body-conscious and status-driven but less obviously showy aesthetic that Donatella Versace directs today is likely to give the likes of Gucci, say, a serious run for its money.

If she herself had to sum up the new-look Versace, for which the label is again receiving its fair share of acclaim, Donatella Versace would say that the clothes are "less decorative [with] more focus on cut and proportion. It's more simple but still sexy. Women have a brain, they don't just wear clothes to look at themselves in the mirror. We read magazines, we read newspapers, we know what is going on in the world, and even if we do travel in a limo, we still have to get out of it to walk to the school gates."

Whichever way one chooses to look at it, the strategy appears to be working. The company's Milan HQ announced last week that the Versace Group, as it is now known, is back in the black. The six-month period to June this year showed consolidated revenues of €148m (about £100m) and a return to profit before tax of about €2m.

"I realise now," Versace says, "that a lot of my partying life was really a reaction to my sadness, so I didn't have to think about it, so I could cover it up. I don't want to act like a victim, I never like that - and, of course, there are a lot of very good things about my life - but the sadness was very strong, very painful. I felt frightened and vulnerable and insecure and having to live all that out in public was the most terrible part.

"I have lost a lot of people in my family. My father, my mother and, of course, my brother. Gianni's death was very dramatic. There is no way to rationalise it. There was no resolution. It was difficult for me to accept, difficult to explain to my children."

She still thinks of Gianni every day. "Me and Gianni, we always used to tell each other jokes. When I do something important I always think [she looks up to the heavens and smiles], 'What would you think about this?' Sometimes, before shows, I have nightmares. I dream that Gianni is alive, takes a collection, throws it into the ocean and says, 'How could you do this to me?'"

Much Italianate gesticulating, not to mention expletives, ensues before Versace departs to paint the town red, just as she always has, this time in the presence of Nicole Kidman, Natalie Portman, The Killers, Claudia Schiffer and more. Her escort this time, however, is her daughter Allegra, taking a break from studying drama in the US to accompany her mother at this pivotal point in her career.

"Allegra has a lot of shares in the company," says Donatella Versace as our interview draws to a close. "She doesn't have to design but when you inherit a patrimony like that... Well, you're not likely to become a hairdresser, are you?

"People are always surprised when they spend time with my children by how normal they are. They're polite. They're well mannered. They're very down to earth, in a way. And me? I'm a survivor. And I like survivors."

The October issue of 'Elle', guest-edited by Donatella Versace, is out now. The Breast Health Institute; www.breasthealthinstitute.org