Fashionable master of memorials wins project to match his towering ambition

He is small, intense and talks too quickly when he's excited – which is often. He doesn't dominate a room like some of his more obviously charismatic peers. His schmoozing skills are limited by an inability to make vacuously charming conversation. And, as an architect, he only completed his first important building three years ago. So what is it about Daniel Libeskind that has won him the greatest and most emotionally-charged building project of the millennium? What makes him the billion-dollar architect?

Declaring the intention to "restore lower Manhattan to its rightful place in the world", Michael Bloomberg, New York's Mayor, announced yesterday that Libeskind had been chosen to rebuild New York's World Trade Centre site, devastated by the collapse of its twin towers in the 11 September terrorist attack. The 55-year-old and his relatively small team based in Berlin saw off some highly impressive offerings from five other extremely powerful practices, including Foster & Partners in London and a powerhouse team called Think, which contained three of the world's best architects.

The key to Libeskind's triumph is not architectural savvy, but death and longing. And the sombre proof of this lies in another of his projects – the quite extraordinary Jewish Holocaust Museum in Berlin. Libeskind does loss like no other living architect and in Berlin he delivered a building so drenched with physical and spiritual meaning that it is beyond normal modes of criticism; every angle, every void, every play of light and shadow is linked, by meticulously calculated geometry, to the positions of the homes of hundreds of the city's lost Jewish families.

Libeskind's solution to the reinvention of the 16-acre New York site came in a second of pure revelation. Over tea at the Four Seasons Hotel in London last month, he admitted that when he first visited the site, no ideas came to him and that he had turned to his wife, Nina, and said: "What am I going to do? And then, when I walked down to the bedrock, I saw the whole scheme. And I said to Nina that I was only afraid everybody's going to do the same thing – it was so obvious."

He has always been a quick thinker, a super-achiever since he sailed into New York harbour in 1959 on board the SS Constitution, which had carried his Holocaust-surviving family from Haifa to the land of opportunity. His precociousness showed itself in remarkable accordion-playing skills, and he performed virtuoso pieces at Carnegie Hall.

That wasn't good enough, though. A few years on, he was giving classical piano recitals. Still not good enough, so he immersed himself in the esoterica of philosophy and higher maths – subjects that, today, are at the heart of the highly complex and fractured forms that characterise architecture such as his Imperial War Museum North in Manchester.

Since then, Libeskind has found himself wading through high-profile projects. Commercial developers, corporations, local authorities, wealthy individuals – they all want a piece of his kind of architectural action. The shattered look has become as chic as the shimmering Bilbao Guggenheim flip-floppery that turned Frank Gehry from a cult figure into a conveyor-belt supplier of dazzling, "signature" architecture.

But Libeskind's general success is not the issue here; indeed, it's an irrelevance. He needed to win the World Trade Centre project more than any other – not for career kudos but because the brilliance of the Holocaust Museum had a unpalatable flipside: it has made his subsequent projects seem relatively lightweight, undoubtedly striking but not always loaded with meaning. To compare his explanation of the Berlin project with his justifications of a "uniquely challenging" recent project in Denver starkly reveals the chasm between raw passion and mere enthusiasm.

But if Libeskind had wondered if he had been condemned to a single moment of scintillating professional passion, it's history: he's on fire again. He was initially considered a non-starter for the World Trade Centre competition. He had not even been invited to compete for the project. Instead, he was asked by the Lower Manhattan Development Corporation to act only as a judge of the entries – but convinced the authorities to let him submit a scheme.

By the standards of the other practices he was up against, Libeskind's resources were limited, and his public relations effort was more like a battered skateboard than a well-oiled machine. In the run-up to New York's decision on the site, his PR amounted to Daniel and Nina Libeskind talking to whoever would listen, back-up from their personal assistant in Berlin and a last-minute publicity push by Bolton & Quinn, London's poshest arts communications agency.

In short, Libeskind could not sell his project as powerfully as the other competing practices. Everything about the development of Studio Libeskind's solution was small scale, personal, a kind of down-home Daniel and Nina Show in which the pair got down to basics. They attended every meeting they could in New York at which the bereaved and city officials were present. They talked to survivors. They met the fathers of three firemen who died in the twin towers – men who had meticulously made a site map showing the position of more than 20,000 body parts. Libeskind described it as a visceral rather than intellectual experience.

Their success has been a triumph of architectural substance over slick politicking. Libeskind's scheme, which he calls the Memory Foundation, was always the most coherent of those considered by the Lower Manhattan Development Corporation and the Port Authority of New York and New Jersey. Its Park of Heroes, Wedge of Light, shard-like buildings and circular Memorial Walk are a carefully linked and layered series of commercial and memorial spaces; and the 30 metre-deep (70ft) foundations of the twin towers will be left fully exposed. There is no single, show-stopping element. No need: Libeskind has met total destruction with a furious, white-hot creativity that New Yorkers have decided to trust.

It's the same creativity that the city triggered in him as the SS Constitution entered New York harbour more than 40 years ago; and the same that led him to pack a copy of the US constitution, a story by Herman Melville and the poems of New York's greatest poet, Walt Whitman, when he left Berlin to assess the remains of the World Trade Centre site months ago – an immigrant to a new wasteland of violent loss.

But can Libeskind pull it off? He says he has never worked so hard on planning infrastructure and construction phasing. His scheme may look the part but there's no doubt that its architectural integrity will remain at risk in the foreseeable future. The site's lessee needs new buildings as quickly as possible for commercial reasons, and if any part of Libeskind's scheme proves problematic, quick fixes may be sought and cut-price redemption could ruin the project.

Come what may, the architect will fight for architectural clarity, just as he fought Berlin's planners for six years to achieve a kind of perfection with the ultra-radical Holocaust Museum.

Great monuments of the world

LONDON: THE CENOTAPH

The Cenotaph, in Whitehall, was designed by Sir Edwin Lutyens and built in Portland stone as a lasting memorial to Britain's war dead. The monument – whose name means "the empty tomb" in Greek – was unveiled in 1920, and inscribed with: "The Glorious Dead". A prototype structure was made of wood and plaster but so successfully caught the public imagination that a more lasting monument was commissioned.

BAGHDAD: THE SHAHEED MONUMENT

Unveiled in 1983, it commemorates Iraqi soldiers killed in the Iran-Iraq war, one of a number of tributes built using the oil revenues of the 1970s and 1980s. The monument is part of a complex of domes, platforms, an artificial lake and even a children's playground.

WASHINGTON: THE VIETNAM VETERANS MEMORIAL

Known simply as The Wall and dedicated in 1982, it is inscribed with the names of nearly 60,000 people killed and missing in the war. The Three Servicemen statue was later placed near The Wall and, in 1993, the memorial was completed with The Vietnam Women's Memorial.

JERUSALEM: YAD VASHEM

Contains the largest collection of material on the Holocaust in the world, with nearly 60 million pages of documents and almost 100,000 still photographs. Covering more than 45 acres, it has exhibition halls and monuments including the Hall of Names, recording biographical details of millions of victims.

HIROSHIMA: PEACE PARK

The Park has a series of monuments to the thousands of dead from the first atomic bomb dropped in war on 6 August 1945. Books registering the names are enclosed in a stone coffin that is part of the monument.