England has changed. These days it's difficult to tell who's from around here and who's not.''

Witty and compassionate, expressing public perception and private unease, these two short sentences form an incisive opening to Caryl Phillips' powerful novel of asylum seekers and of a nation deeply affected by changes in the world around it. At the same time, Phillips captures the slightly petulant tone of a retired music teacher no longer sure of her footing in the place where she has spent all of her working life.

Each of the five sections of A Distant Shore flows from these few words, the potent blend of polemic and subtle characterisation pitched in a single idea.

On this occasion Phillips moves away from the more remote historical contexts of previous novels to the sharply contemporary. Highly regarded and rewarded, a Booker nominee for Crossing the River, he is one of our most rigorous examiners of bigotry and racism.

Here he writes, on the one hand, of Dorothy Jones, escaping from her recent past to the haven of an English village called Weston; on the other, of Gabriel (later Solomon), an immigrant looking for sanctuary from an African country riven by tribal conflict. Phillips' intention of making connections and drawing parallels remains fundamental to the tale.

Both Dorothy and Gabriel are increasingly disoriented and made vulnerable as they find themselves cut off from the values and assumptions with which they have grown up. Each is shipwrecked on ''a distant shore'', seeking - and ultimately failing - to fit in. As Dorothy observes with pained self-awareness: ''I'm pretty sure that I've become the sort of person that Weston people feel comfortable talking about.''

In Phillips' hands, the village of Weston is specific and representative. It is surely not an accident that from the hill above Weston, Dorothy can view the day's dying sun - the English sun so weak and impotent beside the heat of Africa. It is a pub, shop and canal village - a community wishing to maintain its identity, with barely

concealed contempt for the bungalow development just up the hill and the ''incomers'' it houses.

With forensic patience, Phillips exposes the myth of the serene and unencumbered English village. Establishing unspoken layers of intolerance and self-preservation, he notes that Weston is twinned with towns in Germany and France, the one bombed flat by the RAF, the other complicit in rounding up Jews for the camps.

It is not only her relationship with ''Solomon'', hired as night watchman for the new bungalows, which marks Dorothy out for ostracism. She is already a loner, her life disintegrating into nervous breakdown. Once she delighted her mother, ''whose ambition had never included a daughter at university''.

Now, her achievements have unravelled: a failed marriage, self-deluding affairs, and the death of her sister. Phillips sifts through these events to determine why Dorothy is as she is. Indeed it is his capacity to evoke Dorothy's words, her

irritation and bewilderment, without recourse to dialogue, that is one of the striking

features of A Distant Shore; another is the way he uncovers the similarities between

individuals of differing backgrounds, cutting between them, each time reaching back further into their pasts.

Shifting away from Weston's insularity, Phillips traces Gabriel's flight from the massacres of a Rwanda-like African state, and here the book becomes something of a page-turner. Avoiding unimportant transitions, he boils down the traumatic journey across Europe and final desperate channel crossing to cause and effect.

It is writing markedly devoid of anger - as James Baldwin once observed, Caryl Phillips is frighteningly analytical. All this is important to Gabriel's story, as are the acts of kindness that finally offer him a new life in Weston. But of all the themes one might draw from the news reports of asylum seekers,

perhaps the least likely is their ability to reflect on our own

cultural traits. This Gabriel does, shedding in the process his own name to become Solomon - the man Dorothy watches washing his car as if attempting ''to erase a past that he no longer wishes to be reminded of''.

Like Dorothy, Gabriel struggles to interpret his new life through the lens of past experience, dwelling on peripheral cultural details. He cannot understand English women - Katherine, the immigration lawyer who wears men's trousers and the schoolgirl who brings him food but speaks disrespectfully of her father. Gabriel feels only disgust. He, like Dorothy, is pained by the abandonment of decorum and order.

These two wanderers find each other when Solomon offers to chauffeur Dorothy. Dorothy does not fully understand the new

relationship, and though she appreciates Solomon's politeness and driving gloves, she realises he is ''a problem in her life''. Nevertheless, she thinks of him as her friend. In one small, determined action she demonstrates a dignity (and bravery) that has survived her breakdown - a lone voice in the wilderness, not merely a loner.

In 1987, Phillips observed that the Channel Tunnel, a common European currency and growing freedom of movement across borders would require Britain ''to step down from the aloofness of just two generations past'' and to engage in a painful reassessment of its status. A Distant Shore is an account of such a reluctant ''stepping down'', digging beneath the news stories to excavate a kind of original sin that implicates us all, just the sort of writing that reminds us how vital fiction can be.

A Distant Shore by Caryl Phillips is published by Secker & Warburg, priced (pounds) 15.99.