HAPPINESS, says Mike Oldfield with slow deliberation, is very overrated. "Fun." He pauses. "I think that’s overrated, too. I mean, all these things are very nice. But they don’t compare with peace of mind."

When Oldfield recorded Tubular Bells, the piece of music that made his name, he was just 19 and far from happy. Fun was something other people had; peace of mind was not even a phrase in his vocabulary.

Released in 1973 on the fledgling Virgin record label, Tubular Bells was the record that made Richard Branson his first million. It made Oldfield his first million, too. Branson went on to make many, many more millions and to be very happy indeed; Oldfield has had a more up and down life.

Browsing through the photographs of Oldfield taken in his first flush of fame, a striking fact emerges. The face that peers out from the lank curtain of hippy hair is forever registering bewilderment. consternation, pain. In not one of them is he smiling.

Few enough people recognised him in those days, he says, even if they instantly recognised Tubular Bells. Nobody ever recognises him now. At 45, the curtain of hair has long since been chopped away and what remains has been dyed beach-boy blond. The slight frame has filled out, the sallow features are heavier and more weather-beaten. More significantly, perhaps, the face is now and again seen to crease into a smile.

Oldfield now lives with his girlfriend, Marina, in a rambling Victorian manse set in eight acres of Buckinghamshire parkland, at the end of a long gravel drive. At midday, the household is just stirring. You walk through the conservatory, past the still, blue indoor swimming pool, the electronic exercise machines, the home recording studio strewn with guitars and synthesisers, on to a terrace overlooking an idyllic English country garden: the perfect setting for the rock-star-of-a-certain-age in repose.

Mike Oldfield has had a bit of a real -estate dilemma. Three years ago, he put the Buckinghamshire house on the market and left Britain for Ibiza. half expecting to be there for good. He found a piece of land on a cliffside overlooking the sea, made a computer model of his dream house and had it built. He moved in. He got a suntan. And now that house is on the market and he is back in Britain."

It was a kind of fantasy. But having achieved it, I realised your ultimate fantasy never lives up to what you imagine it to be. I spent the first six months looking at the sea going: Wow, isn't this a lovely place…"

And the next two and a half years going mad?

"Kind of . . . " Oldfield laughs. "I foolishly thought I could he happy not working, but after six months, I was bored."

In search of distraction, he threw himself into the island's hedonistic club scene, developing an unexpected interest in the repetitive rhythms of "house" music. He began experimenting with the tinkling piano arpeggios that begin Tubular Bells, putting it to a "house" beat.

The new piece was played in clubs, striking a chord with a generation who were not even born when Oldfield recorded the composition First time around. Thus was born the idea of Tubular Bells III.

The introduction and the climactic ending aside, the new album actually bears no resemblance whatsoever to its predecessors. But, for Oldfield, the name itself has become the equivalent of a trust fund. The first version of Tubular Bells sold some 16 million copies around the world. A sequel, Tubular Bells II, recorded in 1993, at a time when his commercial standing was at its lowest point ever, sold a further four million. He did not even have a record contract when he made the new album, but suggesting it would be called Tubular Bells III was enough to secure one."

But it's more than just a marketing opportunity," he says. "It's like taking out the Rolls-Royce that you keep in the garage for special occasions. It feels as if there's something really powerful that comes about in my music when I dress it up in its finest clothes and give it the Tubular Bells name. Everybody knows Tubular Bells and it’s come to represent something to people. So many people tell me: Oh, it reminds me of my honeymoon, or a wonderful time in their lives. It’s a great compliment."

Oldfield’s associations with the original music are quite different. During the making of Tubular Bells, he says now, he felt "somehow possessed". An introverted, lonely teenager, he was victim to a catalogue of neuroses. "Paranoia, agoraphobia, panic attacks... " Oldfield ticks off the ailments like a shopping list. "You name it, I had the lot. And I took refuge in my music"

It is fitting, perhaps that parts of Tubular Bells should have been used as the theme music for The Exorcist (if ironic that the album generally acknowledged as the harbinger of "New Age" music should, for so many people, be indelibly associated with feelings of fear and nausea).

Oldfield says that he was born feeling at odds with the world - "it’s genetic" - although his troubled family life can hardly have helped. His father was an Essex GP. His mother was a manic depressive, who developed an addiction to tranquillisers and spent her life in and out of mental hospitals (she died in 1975).

Oldfield’s abiding memory of childhood is of family tensions and visiting his mother in a succession of drab, haunting, Victorian institutions. "It was very humiliating to watch that, the lack of dignity. So all these wounds are still inside me, but in some strange way, they give me the power and energy to express myself through music."

Playing the guitar was a way for him to make friendships that his shyness otherwise discouraged. By the age of 16, he was touring the country with rock bands while secretly composing the music that would become Tubular. Bells. Recorded over a period of six months, with Oldfield painstakingly playing every instrument himself, the piece was turned down by every record company in London as "not commercial". It was eventually taken up by Richard Branson as the first release on Virgin. Against all odds, it became an enormous hit, but its success serves only to plunge Oldfield further into depths of misery. He retreated to a house on a remote hilltop in Herefordshire (Hergest Ridge, the title of his second album). Beautiful surroundings dampened the panic attacks, he says, but he was spooked by shops, neon lighting, machinery, the thought of flying - "civilisation in general".

There was one notable exception to his phobia to the modern world. Every so often, he would travel to London, to sit silently under the desk of Branson's secretary while she arranged test drives of the most expensive Italian sportscars. Oldfield methodically worked his way through a succession of Lamborghinis and Ferraris, decimating his bank balance in the process.

By 1978, he was in a parlous state. His album-length musical suites had gone out of fashion, eclipsed by the rise of punk rock. His girlfriend had left him. He was drinking heavily.

"I was having the most awful life."

In desperation, he enlisted in a course in Exegesis, an "encounter group movement flourishing at the time, in which clients were encouraged to face their worst terrors. Oldfield underwent a "rebirthing" experience, emerging from a cocoon of cushions, screaming his lungs out.

The metamorphosis was little short of astonishing. The painfully diffident recluse was suddenly transformed into a garrulous, over-bearing extrovert. He gave interviews Whenever he was asked, was photographed naked in the pose of Rodin's The Thinker, took up flying lessons and made a disco record, Guilty. Most dramatically, he married the sister of the Exegesis leader, Robert D'Aubigny, only to divorce her three months later.

"It was a reflex action," says Oldfield with a rueful smile. "I wanted to try everything."

Exegesis received a bad press at the time. "And I think I might have had something to do with it." Oldfield's proselytising led to the group being investigated by the press; it was also the subject of a controversial television play, and closed down shortly afterwards.

"But it was right for me, that's all I know. I felt like I'd turned the clock back and had a second chance. It became obvious to me that all the panic I’d felt was the memory of my birth, coming out into the world."

In the years since, Oldfield has undergone psychotherapy - "after the buzz of Exegesis had worn off" - and more recently, he has taken up meditation, a practice he likens to "pressing a pause button" on his life.

"Doing that once a day, in the mornings, just for 10 or 15 minutes, it doesn’t matter if the rest of the day is crazy or boring or whatever - I can he peaceful. I’ve got that little platform from which to perform."

Following his short, ill - starred flirtation with matrimony, he never re-married. But two long-standing relationships produced five children, aged between 18 and eight - all of whom, following his own "rebirthing experience", were delivered by natural childbirth.

"The way I’ve rationalised it is that I love my children, but I don’t want to recreate my original family. I don’t want to see them suffer what I suffered. And the best way of doing that is for me not to he there permanently. I was there for the beginning of their childhoods, I see them often and I have five wonderful, happy, balanced, talented, beautiful children."

Establishing relationships has never been difficult, he says. "It’s continuing them that’s been the problem." He has been with his present girlfriend, Marina, for four years. "A very dynamic relationship," he says. "We’re either screaming and throwing things at each other, or hugging each other."

Oldfield’s relaxed demeanour, his readiness to laugh, suggests that something has changed in his life. And it is true, he says, that he no longer harbours the anger he used to feel against the world in general. In particular, he has finally resolved his long- standing resentment against Richard Branson, a man whom Oldfield admits he once regarded as "a surrogate father", with all the fraught feelings of love and hate that description implies.

For years, Oldfield felt he had been ill-served by his original contract with Virgin, and at one stage, he threatened to take Branson to court before matters were resolved. But the two are now friends again.

"We spent an evening together recently, and he feels worse about it than I do. But it was a lone time ago and it doesn't matter any more. What I'll never forgive him for is the fact that he still can't pronounce 'tubular'. It's always 'choobla'…

But if all of this suggests that Mike Oldfield is - finally - a happy man, it is a suggestion he strenuously denies. There were times in Ibiza, he says, when he felt as miserable as he had ever felt in his life. There have been times this week when he has felt the same. But that is hardly the point. "I know I'm very unstable, and I probably, always will be, but the point is that I’ve accepted that about myself." He pauses.

"I love the philosophy that everything that happens to you is the perfect thing to happen to you - even if you can't see it at the time. And if you can accept that, instead of struggling to be something else, you're well on the path to having a peaceful life."

Tubular Bells III (WEA Records) is released today. The world premiere performance takes place this Friday on Horseguards Parade, London SW1. For tickets, tel: 0990 321 321.

Mike Oldfield Tubular.net