A PLEASANT wooded hilltop crests the horizon beyond the fields that roll away from under Dick King-Smith's study window. Sheep and ponies graze contentedly in the meadows and, even on a grey January morning, the writer concedes that the whole effect is like a dream of rural England. "I really wouldn't be happy anywhere else," he sighs. All his life, King-Smith has lived within a few miles of this "special place", called Kelston Round Hill, which he can see rising above the footpath from Bath to Old Sodbury. And over the past three decades, the 85-year-old author has transformed his vision of bucolic happiness into a sequence of children's stories that delight readers all over the world.

If success is gauged by sales, then the man is a phenomenon. His books - which often feature farmyard animals - have sold five million copies in Britain alone, are translated into 20 languages, and have spawned television series and films. The financial rewards are immense, but King-Smith can't really estimate what he earns. A friend of his, an accountant who lives along the lane in the village of Queen Charlton, looks after the figures. The author himself simply doesn't care.

"I never did it for the money, though it's very nice; nor the critical acclaim, which is very nice too," he says mildly. Instead the most satisfying aspect of his work is the tens of thousands of fan letters that he receives from children. Even today, they're scattered over his desk, behind the manual typewriter. There are so many he has to pay somebody to help answer them all. Over the years, his mailbag has included a few classics, he chuckles. "One boy wrote Dear Dick hyphen King hyphen Smith' - they're always doing that with the hyphens - I do enjoy your books. Please try and write a few more before you die.' Another topped that and wrote I do like your books. When you die, please say hi to Roald Dahl for me'."

King-Smith can expect an even heftier postbag next month. In 1990, in a rare authorial excursion from the Somerset farmyard of his imagination, he published The Water Horse. It tells the story of a lonely Highland boy called Angus whose life is transformed when he discovers a mysterious egg, which hatches into the Loch Ness Monster. Jay Russell's glossy $45 million movie adaptation opens to the British public this Friday, but King-Smith has already enjoyed his own private viewing of the film at a cinema in Bath, where he watched it with Adelaide, his great, great granddaughter at his side. The story "to be frank with myself" is not as good as some of his others, but he is pleased to see it made into a film, delighted with the "really beautiful" monster (brought to life by Weta Digital, the team behind Peter Jackson's Lord Of The Rings trilogy and King Kong) and thrilled by the performance of the child actor, Alex Etel.

Although in the US the film has only been a modest box-office hit, American reviewers compared it to Steven Spielberg's children's classic ET. King-Smith is glad of the praise for Nessie's sake. People, he says, are "too blasé and cynical" about the creature now, but he remembers it at the height of its 1950s fame. "Loch Ness - and the monster, in which I believe - are very dear to me. I remember going up there when my three children were small and taking them down to the water's edge. We sat down together. We were all staring across the water, there was nothing happening at all, it was perfectly still. And then suddenly I leapt to my feet and shouted The monster!' and started running. They all jumped up and went like Billy-o." He laughs and shakes his shaggy head. "They chased me up hill and down dale."

There was no monster that day, but the anecdote is a key to King-Smith's success. If you want to appeal to children, the primary requirement for a writer is to retain more than a few childish characteristics, even if your short-trousered days are a distant memory. He puts it like this: "A real adult, someone who is really grown up and adult, someone like Mrs Thatcher, couldn't possibly write a book for children. Somebody like me, even when I'm 85, is pretty damned childish. I laugh at things that young children laugh at."

Keeping that sense of fun into your 80s is one of King-Smith's most attractive qualities. But the truly inspirational aspect of his achievement is the fact that most of his writing and all of his commercial success has come after retirement age. "Yes, it's all arsey-versey," he grins in acknowledgement. "I do like that. It dawned on me after a long time that I was at last in the business of giving people pleasure."

He reached the summit of his achievement only after what he calls "five failed careers". In 1941, at 19, he was commissioned in the Grenadier Guards. King-Smith is proud of his military service, and led a platoon in the tough campaign through Italy. His active contribution was ended in 1944, in a wood 30 miles south of Florence, when he ran into enemy paratroopers who had occupied some Allied slip trenches. A German soldier threw a British grenade which "by a sad mischance" had been left behind. "I saw it coming through the air as you might see a catch coming in a cricket match," remembers the author. The explosion ripped into his legs, buttocks, back and chest, puncturing his lungs. It took him three years to recover, by which time the war was over. "So you could say I failed as a soldier."

After his convalescence, he settled down into farming. King-Smith loved animals (pigs are his favourites) and was an excellent stockman. Gradually, though, his lack of financial acumen undid him and after 20 years he was bankrupted. He worked as a salesman, then trained in management at a shoe factory. Finally, he took a teaching degree and spent the last seven years of his "working" life at a local primary school. In the long summer holidays he had begun experimenting with writing and, after his retirement, he quickly found a rhythm, turning out as many as nine titles a year. In his popular Sophie stories, he drew the inspiration for his central character - a tough little girl who lives on a farm - not from his own children, but from Myrle, his first wife, whom he met when he was 14 and married when he was 20. "I knew what sort of a girl she was, so Sophie was fairly squarely based on her."

Myrle was his muse in other ways. He would write in longhand in the morning, type in the afternoon and read to his wife in the evening. Editing was at her instruction. The sales figures and awards that followed speak for the quality of the writing. For his part, King-Smith won't make comparisons with adult fiction, but says simply: "To produce any book with a good beginning, a good middle and a good end, you have to do the job properly or find a very silly publisher."

Soon his work was attracting attention from film producers. The Queen's Nose was adapted for television and inspired a new legion of fans. But the novel that transformed his life was The Sheep Pig, which won the Guardian Fiction Award in 1984 and a decade later was made into the cinema hit, Babe. His life was rich enough - but now he had money too. King-Smith doesn't do Rolex watches or Rolls-Royces, however. He's afraid of flying and these days won't go much beyond the garden gate. So his three children - Juliet, Elizabeth and Giles - reap the harvest of his success, along with 13 grandchildren, the four great-grandchildren, and Adelaide. "They are the only ones I want to benefit, and they do. Let's say I was not all that well-off when I started writing and now I am well-off. And my children are well-off too."

Myrle died in 2000. King-Smith has since married an old family friend called Zona. She brought children of her own, so now the family is even larger. It can seem like King-Smith, his family and his idyllic world are endlessly regenerating. In the 40 years that he has lived in his higgledy-piggledy Jacobean cottage, he has kept piling it high with ornaments of farmyard animals and mementos of his work, as if the stories will never stop. Sadly, they have. The Water Horse was republished this month, along with a paperback of his most recently finished book, The Mouse Family Robinson. But that will be the last. Dick hyphen King hyphen Smith, who supposedly retired at 60, has finally laid down his pen.

"No, I'm not writing any more," he says with a certain gruff regret. "I'm too old and I'm too lazy. And because every time I sit down and think about something, I end up saying to myself, You've done that already, you silly old devil.'"