The Grand Master: Terence Davies in interview

As gratifying as it was to see Terence Davies' 2008 documentary Of Time and The City receive such unexpected and deserved acclaim, The Deep Blue Sea feels like Davies' real return to the cinema. This adaptation of Terence Rattigan's play is the director's first narrative feature since his masterful The House of Mirth in 2000, and it's a welcome reminder of Davies' gifts as a storyteller, his elegant way with a camera and his astute understanding of turbulent human emotions. When we spoke ahead of the film's UK premiere as the London Film Festival's closing night gala, Davies described filmmaking as his raison d'être, but he admitted that he was nervous about adapting his first stage play for the screen when he was asked to make a film in honour of Rattigan's centenary.

"At first I was a little worried because I had never done a play before," Davies admits. "I had never seen the plays staged, and the only ones I knew were the 1951 [film] version of The Browning Version, which I love, and the late-1950s [film] version of Separate Tables, which I also think is very good." Disregarding the idea of remaking a film he already admires, Davies sat down and read Rattigan's entire canon, eventually landing on his 1952 play The Deep Blue Sea. It has been filmed once before but Davies only had vague memories of Anatole Litvak's picture ("I had been taken to see it by my mother and all I could remember was one scene with Kenneth More coming down these stairs") and he felt that he could do something with that story once he had found the heart of the play. "The subtext is about love, three forms of love, and a love that each person cannot get from the other, it cannot be reciprocated,” Davies explains. “Once I knew that, it made it relatively easy to adapt the rest of the play."

The Deep Blue Sea is a tale of love, sex and scandal in 1950s London. Hester Collyer (Rachel Weisz) is the middle-class woman who leaves her respectable husband (Simon Russell Beale) for charming young pilot Freddie Page (Tom Hiddleston), but who fails to find the happiness she desires in this new relationship. It's perfect material for Davies, chiefly because it allows him to recreate the era that's closest to his heart, the 1950s, a period that he feels is often misrepresented on screen. "The thing that is really important, and this is something that they often get wrong when they do the 50s in this country," he says, "is that while I know how it looked I also know how it felt, and that's a huge difference. There was still rationing, for God's sake, and everything was down at heel because the country was bankrupt."

True to this spirit of verisimilitude, The Deep Blue Sea takes place in a London of shabby bedsits, smoky boozers and cold, dark streets, all depicted on screen with a sense of detail that is immersive and richly atmospheric, and all produced in 25 days on a budget of £2.5 million. "We did it because everybody pulled together and everybody – I mean literally everybody – was so committed to the film," Davies says of this achievement. "It was the most wonderful display of commitment from everybody, from the people who financed it right down to the actors. It was quite marvellous." As well as vividly evoking the 1950s, The Deep Blue Sea evokes some of the great films of a bygone age too, and although Davies chuckles modestly when I mention names like Max Ophüls or David Lean, he acknowledges the influence they've had on his work. "You can't see Letter From an Unknown Woman and forget it; you can't see The Heiress and forget it; and of course you can't see Brief Encounter and forget it, you just can't," he says. "They were there subliminally." However, sharp-eyed viewers will spot direct references to some of Lean's early pictures, and Davies happily admits stealing from a director he adores, adding with a laugh, "I suppose we don't say stolen, we say homage, don't we?"

Another remarkable aspect of the film's small budget is that it stars an Oscar-winner in the lead role, with Rachel Weisz saying yes to Davies without having to be asked twice. She is astonishing as Hester, brilliantly expressing her character's internal conflict and bringing a stunning depth of emotion to the film. I asked Davies if he always had her in mind for this part but it turns out that her casting was the result of a happy accident, coming about after Davies did something he very rarely does – turn on the TV. "I don't watch a lot of television but I switched it on and there was a film on, I think I had missed the first ten minutes, and then this fabulous girl came on." The film in question was one of Weisz's most obscure efforts, Beeban Kidron's Swept From the Sea, but Davies saw enough in it to immediately ring his manager and ask if he had ever heard of Rachel Weisz. "Terence," his manager replied, "you're the only person who hasn't!"

"Don't act it, feel it" is the instruction that Terence Davies gives his actors on set, and that's the lasting impression one takes from The Deep Blue Sea, a film that is deeply felt both in its emotions and its view of the past. It is a wonderful addition to Davies' extraordinary body of work, but I wonder if the director will ever surprise us with something a little more up-to-date? "Well, I did write a contemporary comedy but I couldn't get the money for it," he says. "Whether it will ever happen or not I don't know, your guess is as good as mine. I would have liked to have done it because I thought it was a good and funny script. Maybe one day." That lack of funding has been a perennial problem for Davies, but one hopes The Deep Blue Sea will spur financiers to back one or more of the four projects – ranging from a film on Emily Dickinson to an Ed McBain adaptation – that he is currently working on. "It's just as long as I get the production money. If not I suppose it's back to the old Labour Exchange" he says with a self-deprecating laugh. Surely, the British film industry can't allow that to happen to one of its truly great artists.