A perfect introduction to the classics for children of the 21st century is completed with Penelope Lively’s In Search of a Homeland, which tells the story of Virgil’s epic poem the Aeneid. Alongside Rosemary Sutcliff’s two books based on Homer - Black Ships Before Troy, from the Iliad (1993) and The Wanderings of Odysseus, from the Odyssey (1995) - it rounds off a timely collection of contemporary retellings.

To tackle works of such scale and thundering resonance requires formidable narrative skills. Both Lively and Sutcliff (who died in 1993) have handled these colossal stories with consummate ease, making them child-friendly with no sense of talking down, maintaining the essential magnificence with an elegant prose style that is neither overblown nor underplayed.

It’s not surprising to learn that both Lively and Sutcliff were addicted to Greek and Roman mythology from a very early age. They both had highly unusual childhoods: both only children, both rather lonely and, initially, neither went to school. Sutcliff was very ill as a child; as she has written, although her head was full of stories, she couldn’t read until she was nine. This was largely because her mother so loved reading to her that there was no incentive to learn. Often confined to a “spinal carriage”, she naturally preferred to listen to unexpurgated heroic myths of Greece and Rome rather than struggle with the banalities of the cat who sat on the mat.

Penelope Lively didn’t go to school until she was 12. “I had a very bizarre childhood,” she tells me at her home in north London. “I was born in Cairo and brought up there before and during the war. I was educated at home, under the PNEU (Parents’ National Education Union). It sent books out from England, though a lot of them sank in the Mediterranean, along with other wartime supplies.

“My education was organised entirely by a young woman who started out as my nanny, then became my governess. She had left school at 15, so really we ended up educating each other with all these books. The PNEU system was based on narrative - stories were read out which you then had to ‘tell back’ in your own words, after a single reading. Later on, you had to ‘write back’ the stories. It was a marvellous system.

“Our books included a lot of Greek and Roman mythology, the Bible, the Arabian Nights. Early on, I was fascinated by the mythology. I inhabited those stories, creating my own versions in which I was the heroine. Naturally, I wanted to be Helen: I was fed up with being Penelope - all that weaving, all that sitting around waiting for Odysseus.”

Lively studied history at Oxford; she began writing when she was 30 and married with two small children. Widowed since 1998, she is now a grandmother of four. She’s a refreshingly straightforward person and it’s intriguing, although of course not surprising, how much she has in common with certain characters in her books (“I think it’s inevitable that you write yourself in here and there”).

She is a prolific writer - her novels for children and adults have won many awards including the Whitbread, the Carnegie Medal and the Booker Prize - but In Search of a Homeland is her first retelling. The publisher Frances Lincoln, who died earlier this year with the final volume of the series in sight, had originally commissioned Rosemary Sutcliff for all three books. “But,” says Lively, “Sutcliff died before she was able to start the Aeneid and - quite out of the blue, although I’ve always been a great admirer of her work - I was approached.” Even though Lively is noted for the skill with which she structures her novels, wasn’t it a Herculean task: marshalling and condensing the 12 books of the Aeneid? “Well I did have to tinker with it a bit,” she says briskly. “I had to change the order to explain where the Trojans came from. The wanderings of Aeneas, the Dido story and all the gripping adventures in the first part were much easier to cope with than the second part with its endless battles and bloodshed - difficult to boil that down into a narrative.

“What fascinates me is that all those stories of Bronze Age tribal life must have been based in reality - all that internecine slaughter, all those battles, were between armies of young men whose life expectancy would have been no more than 25. They were just boys - as, indeed, were the soldiers who fought in the First World War and the Second.” (Here Lively echoes the words of the redoubtable Claudia in her powerful 1987 Booker prize-winning novel, Moon Tiger, in which, as in many of her books, history itself is a major player.) “But I think anyone reading In Search of a Homeland with a child would need to talk about different ideas of war, to get it into some sort of historical context. In those days, war was the way to achieve honour and heroism, and, yes, other peoples’ territories.

“You can find parallels between the dispossessed Trojans and today’s economic refugees and asylum seekers. And you have to realise that when Virgil wrote this the fortunes of Rome were at a low ebb; it was in what he considered to be a corrupt, sad state and he was looking back to its majestic origins.”

So what is the relevance of these 2,000-year-old stories to children today?

“Above all, I feel passionately that the powerful imagery and those huge, potent figures provide children with a crucial grounding. It’s vital to introduce them at an age when they are still naturally receptive to story-telling. If they aren’t familiar with Greek, Roman and Norse mythology, as they get older they are going to miss so many of the allusions in Western art, prose and poetry. They’re going to be asking: ‘Who was Juno? Who was Jupiter? What exactly did Odysseus do?’” After her early years in Egypt, steeped in mythology and imaginative fantasy, Lively had a rude awakening when, at 12, she was brought back to England and sent to a girls’ boarding school: “A dreadful place! But I’ve had my revenge on it so often I won’t go on about it now.” However, she does tell me, with relish, that a typical punishment there was to be sent to the library for an hour to read. Then there was the time she was found to be in possession of The Oxford Book of English Verse. “It was confiscated and the headmistress said, ‘You don’t need to read books like that in your spare time. You are here to be taught all that.’ I tell that story when I talk to children in schools, but they never see the point - children don’t understand irony.”

Lively writes about children - and childhood - with unusual insight and sensitivity. Her engaging memoir, Oleander, Jacaranda (1994), examines her own childhood and the solitary child it reveals is not unlike Clare, delving into the past in her richly rewarding children’s novel, The House in Norham Gardens (1974) or the thoughtful, imaginative Maria in A Stitch in Time (1976). In her evocative new book for adults, A House Unlocked, which examines the history of the last century through the prism of Golsoncott, her grandparents’ house in Somerset, and the memories that surround it, she writes: “Children are the aliens who live amongst us, deciphering our mysterious codes, learning to conform to the bizarre requirements of our society.”

Lively’s books for children often feature magical, supernatural, mysterious goings-on - notably The Ghost of Thomas Kempe (1973) - but fantasy has no place in her adult writing.

“I have a block there, I confess. And I hate magic realism. I’m glad it’s dying out. But with children you can use magic to reflect the sense in which, if you are a child, the whole world is fantasy. Children have no preconceptions of the world, anything can happen and children are in a constant state of quest.

“That’s the great thing about being a grandmother: years ago, when I was at the rockface of daily child management and my children would ask things like, ‘Why does the world turn?’, I’d often be too busy, but nowadays I’m prepared to sit down and answer. It’s lovely to see them grow up, to watch that gradual enlightenment, to see them groping into the thicket of adult life that lies ahead.”

As Lively observes in A House Unlocked: “Writing for children seems an act of extraordinary temerity. You are offering to those without any literary tradition a product that stems from adult experience and a complex web of cultural influences. You are inviting them to share some of your concerns and interests, or at least you are if you write without patronage and from the assumption that children are not second-class citizens, but simply ourselves in this opaque and provocative other incarnation. You can reach them through narrative: everything else that you are trying to do must be subsumed within the story, the seven-eighths of the iceberg which, you hope, will leave the child feeling that it has heard a good story but one with tantalising whiffs of something else, a rich and indefinable flavour.”

Although she is still writing a lot, Lively has not produced a children’s novel for some years. “Sadly, I think it’s left me. My husband used to get so cross with me when I said that. ‘It may come back,’ he used to say. And my granddaughter Izzy is very encouraging. She said to me the other day, ‘Why don’t you try to write one, and I could tell you as you go along if it’s coming out all right.’” In Search of a Homeland: the Story of the Aeneid, illustrated by Ian Andrew, is published by Frances Lincoln on September 29, pound;14.99. TES Direct pound;13.99A House Unlocked is published by Penguin, pound;14.99 TES Direct pound;12.99

Next week: Look out for A House Unlocked in Friday Freebies. Friday magazine has 15 copies to give away