Detail in The Devils

Set in a plague-ravaged town in 17th century France and based on a true story about demonic possession and witchcraft trials, The Devils stars Oliver Reed as morally relaxed priest Urbain Grandier and Vanessa Redgrave as convent leader Sister Jeanne. Obsessed with Grandier (to his ultimate destruction, as it turns out) she portrays him in her dark sexual fantasies as a wounded Christ come down from the cross. The film was adapted from Aldous Huxley's 1952 book The Devils Of Loudun and John Whiting's 1960 play The Devils, and filtered through the twin prisms of Russell's religious faith – he converted to Catholicism in his twenties – and a cinematic sensibility which often verged on the baroque.

Irked by images of masturbating nuns, torture and the (now infamous) orgy scene in which a statue of Christ is desecrated, Walker called The Devils "monstrously indecent". Other critics were less restrained, though by this point Russell was well used to harsh treatment: a pre-release screening in London for three American studio executives had gone so badly from the off that he and his producer left for the pub. "Disgusting shit" is how the executives described the film to its creator at a heated showdown afterwards. As a result The Devils was only ever released in the US in a heavily edited form and is only very rarely shown on television. Not for nothing did the director's own headed writing paper bear the stamp of the Spanish Inquisition, a typically Russellesque flourish.

Four decades on, The Devils remains one of the most controversial, flamboyant and disturbing British films ever made. But it is increasingly seen as one of the most important too, a fact underlined by its long-awaited DVD release this week in its original X-rated version. For critic Mark Kermode, who has championed the film for over a decade, it is "a genuinely breathtaking work, the jewel in the crown of Russell's magnificent career". It is, he thinks, "a masterpiece."

Veteran actor Murray Melvin agrees. "Ken will be remembered long after all those establishment boys are dead," he says. "He'll be remembered as one of our greatest film directors."

A friend of Russell's from the mid-1960s until the director's own death last year, the 79-year-old appeared in both the stage and film versions of A Taste Of Honey and later worked with Stanley Kubrick and Scottish director Bill Douglas. Russell cast Melvin in several of his films, beginning with Dairy Of A Nobody in 1964. In The Devils he plays the scheming and hypocritical Father Mignon.

"Ken was demanding but then any good director is demanding," he recalls. "But he was absolutely inspirational. One would have done anything for him if he asked. Everyone makes him out to be a monster but he was just a human being who had a great talent. Unfortunately England didn't always like the talent because they didn't understand it."

The shoot, which took place at Pinewood Studios, was "intense". "It was a tough one to do, with all the cruelty going on. But it was worthwhile and we were only doing history, it wasn't created by Ken. And the history was far worse than anything we could put on screen."

But the critical response and the attitude of the film's American backers paled in comparison to the tabloid frenzy The Devils generated when it was released. There were pickets outside cinemas and as a result 17 local councils refused to allow it to be screened.

"They crucified Ken and they crucified the film. But then the chairman of Warner Brothers who had put the money up was a born-again-whatever-they-are. He thought it was blasphemous. He didn't get the point that it was highly religious, as Ken was," says Melvin. "Ken was destroyed by it. And it runs parallel with his career, in a way – the individual against authority. But he was devastated by it because it was a very personal statement that he made. And the money boys destroyed it."

Asked to list the words used to describe the film at the time, Melvin laughs. "Filth, blasphemy, bring 'em all out and go through the dictionary. They just did not understand his original conception. They do now."

Among The Devils' other less lauded achievements were the breaks it gave to a relatively unknown thirtysomething composer and a young set designer who would go on to make his own way in avant garde cinema. The first was Peter Maxwell Davies, the second Derek Jarman, who came to Russell on the recommendation of a friend who had met him by chance on a train.

"Ken was a great innovator in many ways," says Melvin. "He was interested in design and it's interesting that like Kubrick he started out as a photographer selling pictures to magazines. Someone said to him there's this young artist you should see, he's interesting. And of course Ken did and gave him The Devils – a very daring thing to do. And it was the same with the music ... So he did go out on a limb, Mr Russell. For this vast film, which was so important to him, to choose two unknown people in very important roles was extraordinary. But what he didn't want was the old gang. He wanted that new inspirational talent. And by god did he get it. Derek's set is just fantastic."

Ken Russell died in November last year, aged 84. He never lived to see his original vision for The Devils made widely available, though in the last decade of his life there were occasional festival screenings of an uncensored director's cut which included some footage thought lost. But shortly before his death a full version screened at the Barbican in London. Russell went, so did surviving cast members including Murray Melvin. It was the last time the friends saw each other. "He arrived in a wheelchair because his legs had gone, so I pushed him round the Barbican in his chair," says Melvin. "We had a great time."

When the final credits rolled, the film received a standing ovation. "And there's all us workers with tears flowing down our faces because we remembered the onslaught when it was first shown. And here was the reverse happening, the younger generation all hailing this genius."

The night ended with the septugenarian and the octagenarian taking aim at a wheelchair access ramp, Russell waving his stick in the air and Melvin singing The Marseilles as he ran at the incline. "I said to the people at the Barbican afterwards: 'Do you keep copies of the CCTV? If you do, you've got a fortune there."

A special two-disc DVD of The Devils featuring the original X-rated version and a series of documentaries and interviews is out now (BFI, £19.99)