Up, up, up, up four skinny flights of tatty lino, in what was once Ivor Novello's eyrie, lurks Thelma Holt, that rarest and most exotic of birds, the female impresario. She blows in, beams, and drapes herself across Novello's bed with the nonchalant extravagance only a former actress could manage, slips off her shoes and smears Branston pickle on her cheese sandwich. A nice Northern touch, this, but nevertheless a conscious detail in the show-stopping performance (designed, choreographed and directed by Holt) to which she treats her audiences. Her voluminous costume is flowing slate-blue silk, a cool antidote to the burnished copper bob framing the flapper-girl face; her conversation is frank, confiding and peppered with deliciously indiscreet asides and snatches of savoured gossip. The theatre world is her oyster. She knows it, loves it, plunders it.

Her latest haul is a 26-year-old director, Matthew Warchus, whose work for the West Yorkshire Playhouse in Leeds has been called intelligent, illuminating and important. Holt stumbled across him when she was up there to do an Arts Council appraisal. 'His Fiddler on the Roof was on. My heart sank - I saw Topol in it, he was very charismatic and I had no desire to see it again. I'm more inclined to Fears and Miseries of the Third Reich than musicals. I like The Duchess of Malfi for a bit of comedy. But I was enormously elated by what I saw - beautifully ETHER write errorchoreographed, full of energy and a very clear director's vision.' Having never heard of Warchus, she sent for his cv. 'I thought anyone who's mad enough to do (Ben Jonson's) Sejanus must be interesting. We met for luncheon. I needed to know something about him - he's not a laugh a minute and not enormously forthcoming - but we had to escalate a relationship and I asked him, 'If you were to choose one actor from the RSC who you'd like to work with, who would it be?' He didn't hesitate; he said David Bradley. I thought, great, here's common ground. We'll like the same actors. That's how it happened.'

'It' is Warchus directing Shakespeare's comedy Much Ado about Nothing at the Queen's, in what Holt calls The Avenue. That's Shaftesbury Avenue in the West End. Shakespeare in Shaftesbury Avenue is as rare as a parrot in Trafalgar Square, but it doesn't necessarily have the same crowd-pulling attraction. Yet Shakespeare has always had an emboldening effect on Holt, ever since she played 'Lady M' in the nude at the Open Space Theatre, which she founded with Charles Marowitz. When she gave up acting for producing in the Seventies, she brought Rustaveli's Richard III, performed in Georgian, to the Roundhouse in Chalk Farm. As executive producer of the Peter Hall Company, she put The Merchant of Venice into the dispiriting Phoenix in Charing Cross Road, but then Dustin Hoffman was Shylock; she filled to busting the difficult barnlike Riverside with Robert Sturua's Hamlet, with Alan Rickman as the prince.

This Much Ado is substantially different. Relatively starless (Mark Rylance and Janet McTeer play Benedick and Beatrice), neither does it have the foreign exoticism that has become Holt's trademark through productions such as Ninagawa's Tempest. And Holt has her own money in it. All her reserves (from the hugely profitable Three Sisters with the Redgraves) make up some pounds 100,000 of the total pounds 250,000 production costs; the Arts Council has put up pounds 60,000; a further pounds 80,000 comes from Holt's angels ('Who'll fly away if they don't get their money back') - among them Cameron Mackintosh and the booking agency First Call.

Admittedly, Holt hasn't mortgaged her house this time, as she did for Three Sisters ('without losing a wink of sleep'), but she still has much to lose. Far more, she believes, than Warchus. She thought hard before offering him the potentially brutal exposure in that most intimidating arena, the West End. 'I confess that pure selfishness made me think I'd like to get him now before he gets fucked up. But he's not vulnerable because he has none of the self-doubt that comes from experience. Peter Hall was 26 when he did Shakespeare's Histories; Peter Brook was 24 when he made his name; I think you're a great deal less vulnerable at 26 than at 40. If he is shot down, I go down with him, but he will bob up again very quickly. He's on contract at Leeds and is signed up for several jobs. I won't be able to pay my staff.'

(To Holt, three times married, three times divorced, the staff are beloved family. Malcolm, her deputy, has been with her for 17 years; her assistant arrived 10 years ago, as a gangly 18-year-old 'slave' named Jane, to be coached for Rada. She went off the idea of becoming an actor the moment she saw Donald Sinden measuring up his billing for a show and fuming with discontent. So she stayed with Holt, who rechristened her Sweetpea; she later changed her name by deed-poll.)

While Holt freely admits that she is forever popping into churches - she is a Catholic - to light candles for her various projects it is impossible to break through her optimistic shell to make her focus on failure. 'Oh, I've met it - and turned it into something else. I'm Pollyanna-like. I don't recognise the possibility of not succeeding. Emotionally I cannot afford self-doubt in this area. I'm attracted to talent, addicted to genius. There's something God-like about it. I'm really into worship, that's my motivation. It comes my way commensurate with the way that I feel about certain people. Well, we all have something nasty lurking in the woodshed, don't we?'

Not everyone she works with gets the genius label. 'There are very few - Stein, Ninagawa, Brook - and I've never met a young genius. Warchus is talented - I don't know whether he's great. But talent is worth making sacrifices for. I work for the tremendous buzz I get out of these people. I have the rather unattractive quality of fanaticism. Lack of money is an excuse for not doing something. You go ahead and do it, plan it and find the money later.'

Part of her current bout of fanaticism also stems from her belief that 'everyone else is fucking Shakespeare up. They aren't trusting the text and telling the story. I wanted to compensate for that.' Part of it, however, comes from a deep conviction that Much Ado is the kind of 'feel-good' play required by the recessed. 'I started thinking about doing the play last year when we were going through agonising times. I can't see those green shoots even with my reading glasses on; it's been a rough ride and everyone's down, so why not do a play that's really joyous, that has a big heart, where you're glad that these two couples get married in spite of their wrong- footedness? If it works, it works; if it doesn't, kill it fast and get on with the next thing.' (In her case, Ninagawa's Peer Gynt for the 1994 Winter Olympics.)

The absolute confidence she has in her directors is tempered by a refusal to believe in their supremacy or, for that matter, that of the actors. 'Ours is a profession which is full of wankers.' Technicians occupy a different plane altogether, however. 'If my technical manager, Michael Cass Jones, wasn't available, I'd delay the whole show.' But, for all that, she refuses to be simply a money-box. For the past month she's been up North on tour with Much Ado, watching every performance and writing notes for Warchus. 'I play the punter,' she declares. 'She has an eagle eye for detail,' says Warchus, who maintains that he's a private person who has found working with a producer somewhat demanding. 'I've never met one before - though that might not have helped. I gather they aren't all like Thelma.'

'Much Ado About Nothing' opens on 6 July at the Queen's Theatre, W1 (071-494 5040)

(Photograph omitted)