THERE'S only two things you don't talk about in polite company - one is politics, the other is religion." Michelle Shocked delivers her favourite line with a shrug that signals her intention to talk about faith, politics and little else. No-one has ever called her polite, but that's how she likes it.

Shocked defined herself through confrontation the moment she ran away from her strict Mormon upbringing in East Texas to become a folk singer. Her rebellious streak landed her in mental hospitals, jail cells and homeless shelters in San Francisco. The cover of her debut album, Short Sharp Shocked, showed her being manhandled by riot police, a choke hold stifling her shout of protest. From the name down, she was outraged, appalled, and ready to fight.

She struggled against misappropriation of her music, taking her label to court and winning on the grounds that her contract amounted to slavery. She passionately condemned US foreign policy, speaking out against the invasion of Iraq back when it meant career suicide. She confounded the expectations of the music industry and her fans by refusing to stick with any one style, singing folk, blues, rock, gospel, swing, latino and Disney songs as the mood took her. She has no regrets.

Interviewing her is bracing, but never bland. "I find the question to be a particularly British type of journalistic tedium," she tells me at one point, adding that she would like to put her hands around my throat and strangle me. "I really want to get to the soul of this, but you already have your questions. If you just want Q&A then I'll give you answers, but don't waste any more of my time. I'm trying to get to some heart matters here, man."

Shocked is passing through New York on a tour to promote To Heaven U Ride, a live Sunday morning gospel set that she released on her own label, Mighty Sound, earlier this year. After a trip to a hat shop to get her trademark silk fedora professionally cleaned, we take tea at Starbucks. Shocked thinks that "people are hypocritical" in their attitudes to the corporate coffee chain, and in any case, she really likes the chai there. Knowing what your cuppa will taste like is important when you're living out of a suitcase for weeks on end.

She pays with a gold American Express card, but times are evidently tight. She is staying at a grim hostel in Chelsea and travels from gig to gig in a small car barely big enough for her guitars and her three backing singers. "We wanted to go home with some money," she says, "so the tour budget kept shrinking until we were sharing a room."

Not that she is complaining. Shocked lived in enough squats and slept in enough doorways when she was young to know better than to get too comfortable with stardom when it arrived in the late-1980s. "I have never, ever, written songs to make money," she says. "It's something that I love to do. The fact that it becomes a recording is secondary.

"I've weeded out all the tourists by now. By now I probably have fans that I could put out a neo-Nazi album and they'd say, I sure didn't see that one coming'. When you stop being cool, that's when you can start calling people fans."

Her gospel album comes with a "womanifesto" that begins: "Ask me about my religion. Of course no-one ever does." But whether she is asked or not, the conversation returns again and again to her faith. Her political ideals, her feminism, her family relationships - all are expressed in the language of destiny and belief.

Fifteen years ago, Shocked was saved, at the charismatic Church Of God In Christ, close to her home in South Central Los Angeles. She went along for the singing, thinking that "this music would be so good if they'd just give that Jesus crap a rest", but then, to continue the well-worn story, "stayed one Sunday too often".

"When I made the altar call I was crying," she says. "It's almost like crawling across broken glass. The preacher said, This is the happiest day of your life', but it took me a long time to understand."

She soon joined the choir, as the only white woman in an African-American chorus, an occasional soloist with her own unofficial title: Sister Shocked. "My sister said, Chelle, you look like a grain of rice in a bag of chocolate chips'."

Shocked was born Karen Michelle Johnson, in Dallas in 1962. After her parents divorced, when she was three years old, she was raised as the eldest of eight children by her mother and step-father, an "army brat" moving from base to base in the US and Germany. In her teens, the family returned to Kelsey - a one-church, one-store, one-cemetery town founded by Mormons in East Texas, in the middle of beautiful Bush-backing nowhere.

Her father, "Dollar" Bill Johnson, was a part-time musician who taught her blues and folk songs on weekends and holidays, but otherwise she was raised according to rigid Mormon dogma - no tea, no coffee, no fun on Sundays. "I was taught to be a racist. I believed God was racist," she remembers. As soon as she was old enough, she ran away, ever further each time: to Dallas, to Austin, to San Francisco, to New York, to Amsterdam, to Rome.

In San Francisco, she was arrested at a squatter's rights demonstration, given a shot of the now-discredited control drug Thorazine and taken to a psychiatric ward in handcuffs. Not long after she was released, she suffered a "psychotic episode" and was committed to a second mental hospital, in Texas, by her own mother.

After a month of therapy, medication and electric-shock treatment, her family's health insurer declined to pay the bill and sent her home. This time, she left for good. She would not even speak to her mother for the next 25 years.

"I thought I had rejected religion whole qua, until I took the bad acid," she says. "I was having apocalyptic, nihilistic visions that were part and parcel of the Mormon indoctrination of my youth. I was wandering around in the rapture. They got to me young and the more I tried to run, the more I tried to reject it. It became an antithesis to the thesis. I looked at my idealism, sincerity, passion and commitment and realised that the source of it all was a profound need for spiritual succour."

Five years ago, she finally got back in touch with her family. "I'd already forgiven my mother many years prior but I just hadn't had the courage to let her know. So I called her up. She was very gracious."

That bond has been re-established, but some wounds remain raw. "I get reports that my sister is basically pretending she doesn't know me," Shocked says, with a tangible note of hurt in her voice. "She's embarrassed to know me. They're in East Texas and Bush plays really well there."

The record that lifted her up, out of the squat scene, away from fiddle festivals and hardcore punk gigs, was the Texas Campfire Tapes. Englishman Pete Lawrence ran a tiny independent label, Cooking Vinyl. When he met Shocked at the Kerrville Folk Festival in Southern Texas, he was so entranced by her finger-picking guitar style, her beguiling voice, by turns pure and half-spoken, and her unselfconscious, storytelling lyrics that he asked if he could record her performing. He only had a Walkman, running low on batteries, but it would have to do.

Lawrence claimed to be a writer for Folk Roots magazine, but when he got back to Britain he released the set as a live bootleg without her permission. The collection of songs, punctuated with banter and laughter, with grasshoppers chirping loudly in the background, became the surprise hit of 1986. It topped the indie charts, got hours of airplay on Radio 2 and earned Shocked a major label deal, but it didn't make her any less angry.

Oddly enough, To Heaven U Ride was never supposed to be released either. When Shocked performed at the Telluride Blues Festival in 2003 she had a clause in her contract that forbade organisers from taping her set. No-one told the team in the recording truck, so they taped her anyway.

Three years later, Shocked listened back to the performance and was impressed with what she heard. For an artist so determined to retain control over her music, who likens taking Mercury Records to court in the mid-1990s to David's fight with Goliath; it was a confusing experience. Shocked is bitter that her wishes were ignored, but pleased with the results.

"This is about control of my destiny, which is very much in God's hands," she offers. "The fact that he may use bootleggers and pirates to guide that destiny is obviously something I don't have a say in."

At the live show in New York, Shocked's rambling confessional stories threaten to eclipse the songs. Cover versions are chosen at the intersection of sacred and secular: Sister Rosetta Tharpe, The Band, The Staple Singers and Billie Holiday. Stripped of a rhythm section, it is up to Shocked to provide the intensity, while her backing singers fill out the sound.

One thing she does not talk about much, either on stage or in interviews, is her sexuality. In 1989, at the New Music Awards, when she beat Tracy Chapman, the Indigo Girls and Phranc to the title of "Best Female Singer or Group", she accepted her trophy with a smile and an offhand comment: "This category should have been called Best Lesbian Vocalist'."

A year later, she told Chicago's OutLines magazine that "it would have made all the difference had I grown up knowing that the reason I didn't fit in was because they hadn't told me there were more categories to fit into". She has remained a gay icon ever since, despite being married to music journalist and producer Bart Bull for a decade. "I have a lot of contradictions," she says.

After her marriage disintegrated five years ago, Shocked fell "madly, passionately in love" with graphic artist David Willardson, whose Disney meets Pollock canvases are massively popular in Japan. They live in separate houses, a short drive apart in Los Angeles, and are working together on a collection of songs and paintings about iconic cultural figures: Audrey Hepburn, Frida Kahlo, Georgia O'Keefe and so on.

She has reconciled her sexuality with her faith, despite occasionally encountering conservative, homophobic attitudes within the church. When a visiting pastor preached that the Bible clearly defines homosexuality as a sin, she collared him afterwards and made her views known, but more generally she has accepted that it's best to agree to disagree. "You cannot make a round peg like me fit into a square hole like organised religion," she says, "but there's lots of things that I can use."

When Shocked opposed the invasion of Iraq with characteristic vehemence, the response from a section of her audience was "ridicule, hostility, outright rejection, people walking out of shows". She also found that booking gigs was suddenly much harder than it used to be. However, the experience has not tempered her willingness to say the unsayable. She is happy to suggest that the USA deserves to be a terrorist target, for instance, paraphrasing an infamous Malcolm X quote in the process. "September 11 was just chickens coming home to roost," she says. "The violence, the aggression, the inherent contradictions and the ultimate dysfunction of American society has led to this juncture."

Her anti-authoritarian world view remains much the same as it was when she was younger. What has changed is the nature of her activism. This radical feminist, who never missed a chance to attack political oppression, sexism or racial intolerance, has now concluded that power and wealth have become so concentrated that prayer, not revolution, is the only option.

She says: "Folks, you'd better start praying like hell. This is truly gonna take a miracle to sort out. The good people had better start calling on a superpower to resolve this thing that is beyond human power. Look to Mahatma Gandhi, look to the Reverend Martin Luther King. They put the principle of non-violence to work. Power should not have ceded its authority without a bloody struggle, but it did."

Shocked remains a professionally awkward customer who never backs down from a confrontation on principle. She last tussled with security guards earlier this year, on a Southwest Airlines flight, when a jobsworth steward flexing his post-September 11 powers wouldn't let her sit on an exit row. "Move or I'll call the cops," he told her, so she refused, knowing she'd be thrown off the plane.

Is she more or less angry now that she is older and spiritually at peace? "Oh, I'm more angry, but I'm also more effective," she says. "I'm still angry, but I have a few more skills, a few more credit cards, a few more contacts and a lot more experience."