A dull, mid-July, Saturday afternoon in Castle Street, Cambridge. Stray tourists are pressing their noses against the windows of Kettle’s Yard art gallery. Inside, an American family, some Japanese art students, a mum, her son, and a grinning dad with his daughter are molesting giant lumps of oil-clay.

They thump, prod and claw, pinching out noses, gouging out eye sockets, twisting antennae, horns and other shapes. The show holds its spectators for a good five minutes before they move on. One loiters, gesturing towards the entrance. Then he, too, follows the rest up the hill towards the pub.

The exhibition they almost visited is Britain’s first-ever showing of the work of Mono-ha, a radical art movement that emerged from Tokyo’s 1968 student protests. But like many others who come to Cambridge for a day of dreaming spires, punts and honey for tea, they reject displays of modern art and so also miss one of the best experiences in the world of domestic interiors.

The yard’s location, a 10-minute walk from the tourist magnets of Cambridge’s city centre, adds to the feeling that this is a place apart. It’s the wrong side of the Magdalene Bridge, across the ring-road, outside the charmed inner circle of the university city. The sort of place you make a pilgrimage to or stumble upon during your search for a less-crowded pub.

But the art gallery, a typical 1970s, Arts Council-funded space, is just one of several faces of Kettle’s Yard. And for all its challenging exhibitions and far-reaching educational activities, it is not what we’re here for. The hidden treasure is the house behind the gallery, where the yard’s founder, Jim Ede, and his wife, Helen, lived between 1956 and 73. Seventeen years is how long it took them to realise Ede’s dream of building “a living place where works of art could be enjoyedI where young people could be at home, unhampered by the greater austerity of the museum or public gallery”.

Ede was partly establishment, partly an outsider waging war on the philistinism of England’s ruling classes. As a curator at the Tate Gallery in London through the 1920s and early 1930s, he befriended leading artists and made the reputations of others, including the Cornish “primitive” painter Alfred Wallis. His 1930 biography of sculptor Henri Gaudier-Brzeska, Savage Messiah, caused a scandal at the time of its publication, and, 42 years on, seemed spicy enough to attract film-maker Ken Russell, who directed the film of the same name.

Ede quit the Tate in 1935 to build the first version of his art house in Tangiers. He landed back in Britain in the mid-Fifties, with the bold notion of persuading Cambridge University to clasp modern art to its bosom. To appreciate the results of this endeavour, cross the courtyard from the gallery and enter the curious house the Edes built - eventually with the support of the university - by knocking together four tiny labourers’ cottages and grafting on an ingenious, modernist extension.

You have to ring the bell and wait to be invited in. The first impression is of entering a rather cramped country cottage owned by a genteel professor. The furniture is simple and elegant. Art is everywhere - miniature Gaudier-Brzeska sculptures on the tables and shelves, paintings by Wallis, David Jones, Ben Nicolson and other friends lining the walls, even in the bathroom and toilet. Nicolson hated the fact that one of his works was listed as being in the Ede’s “lavatory”.

And the art is always balanced by natural objects. Perfectly spherical stones laid in spirals; seashells, crystals and plants, all arranged with devastating aesthetic precision. The Edes were experts at making relationship between objects in space, decades before anyone in the West had heard of feng shui.

There’s a long, narrow dining area, but no sign of a kitchen. Upstairs, dimensions expand, and the domestic ambience gives way to something like a club for art historians, or a Platonic academy. There’s a grand piano in the first floor living room; above that, an attic room lined with Gaudier-Brzeska drawings.

But the biggest surprises come as you cross the “bridge” from the old cottages to the modern extension. First, there’s the “dancer” room, named after Gaudier-Brzeska’s bronze figure standing on an oak table. On the right day - a sunny winter afternoon, according to an attendant, when there are few visitors - this space becomes a corner of paradise, as sunlight streams through a translucent, honey-coloured, alabaster sculpture, then meets the bronze and the oak.

On again, and into the extension designed by Leslie Martin, architect of London’s Festival Hall, and David Owers. This is modern in a soft Bauhaus style, almost grand in its spaciousness, designed in part to allow the Edes to stage concerts for undergraduates and friends. There is more art on the walls and floors, but these pieces are bigger. At the far end is a library area, with Ede’s large collection of art books and catalogues there for the browsing.

You leave Kettle’s Yard feeling you’ve glimpsed a slice of a more civilised world. It’s little wonder that the posh interior design magazines are queuing up to do photo shoots here, but there’s more to it than simple good taste. It tells you a lot about Ede that no sooner was his project complete than he handed it over to the university and left Cambridge to spend the final 20 years of his life in Edinburgh, looking after his ailing wife.

House opening times: 1.30pm-4.30pm (summer); 2pm-4pm (winter), closed Mondays. Gallery: 11.30am-5pm. Admission free. Kettle’s Yard, Castle Street, Cambridge CB3 0AQ. Tel: 01223 352124. E-mail: mail@kettlesyard.cam.ac.uk; website: www.kettlesyard.co.uk