The translated novels of one of the best-known Dutch writers were likely to sell no more than 10,000 copies in the US, a travesty that delighted Grunberg. Fame had little chance of finding him, he thought.

'Only 5 per cent of fiction in the US is fiction in translation. Whereas in Germany it's more like 50 per cent,' Grunberg says in the middle of a literary tour in Sydney. 'I run into people in New York who have no clue who Philip Roth is. Fame in the literary world is very different to the fame in the outside world.'

But fame tracked him down. A book he'd written under a pseudonym had been named best debut novel in the 2000 Anton Wachter Prize. Grunberg's alter-ego, Marek van der Jagt, had an e-mail account and postal address in Vienna, but was otherwise a recluse. Grunberg laughed as reviewers revealed where The Story of My Baldness had borrowed from the great works of Austrian literature - novels and writers Grunberg had never heard of.

'I learned that reviewers follow other reviewers and information that publishers are feeding them.'

Van der Jagt wrote an article for the newspaper NRC Handelsblad that condemned contemporary Dutch fiction, reserving the serious venom for the frivolous Grunberg.

Journalists sensed a scandal if they could prove that van der Jagt was Grunberg and the Anton Wachter Prize for a debut had gone to an author who had sold hundreds of thousands of books, been translated into 18 languages, won the Netherlands' AKO Prize twice, as well as a host of German awards, and made the shortlist for the International IMPAC Dublin Literary Award, the most lucrative prize in literature.

Reporters were despatched to Vienna. A bemused woman in pyjamas - a friend of a friend of Grunberg's - was too dazed to convince them that van der Jagt had moved on. A theatre that had allegedly staged two van der Jagt plays hadn't been briefed on the ruse.

The knives were out, but the reporters couldn't confirm that the photo of van der Jagt on the cover of Baldness was just a guy Grunberg had met in Florida. 'I kept denying that it was me for another two years,' Grunberg says. 'I felt liberated by it. The newspaper asked a computer geek to find out where the e-mails [from van der Jagt] were coming from. They were traced to the northeastern part of the US, and there aren't that many Dutch authors in that part of the world.'

The game was up when an Italian academic developed a computer program to verify whether prose is by a particular author. Instead of resolving the 400-year-old debate over whether Christopher Marlowe wrote as William Shakespeare, the Italian's sights rested on Grunberg, who came clean in 2002, the year of van der Jagt's second novel, Gstaad 95-98.

'Some people were p***ed off because they thought I only did it to win the prize for best first novel twice. That was stupid, because how could I know that I would win?' says Grunberg. 'Some thought of it as a literary game. One guy from a literary magazine was really p***ed off because he'd written that he liked my work but hated the other guy. He was a friend and he was hurt. He didn't speak to me for a while.

'I always wanted to see how people would react to a book written by me without knowing it's me. I find it really tiresome to have to do all the readings and signings and television for the first few weeks after releasing a book. Signing books is fine, but sitting behind a table for an hour, not able to speak to anyone, is really stupid.

'I liked the idea of a new author who didn't have to do the signings. All you could do was introduce him via e-mail. That was one of the main reasons I decided to do it.'

Between trips to Afghanistan, where he was embedded with troops, and the US prison at Guantanamo Bay, Cuba, Grunberg released his 10th novel, Tirza, last year. His writing combines absurdism with light humour, cynical big-picture philosophy with the peculiarities of mundane daily life. Writing as van der Jagt allowed him to venture into darker territory. Although Grunberg is wary of the literature industry, he often depicts writers. Phantom Pain is framed as the unpublished memoir of fading novelist Robert G. Mehlman. The novel is full of descriptions of the writer as manipulative cannibal.

Published in 2000 at the height of his fame, Phantom Pain still has the tone of an author confused by the nature of writing. Grunberg writes as a literary outsider, as a man with an artistic bent and a few ideas who feels he has as much right as anyone to circulate them in the nearest medium. A character in Phantom Pain says: 'If you weigh your words too long, nothing comes out of your mouth; before you know it your life is over, and you haven't said a thing.'

After a decade as a Dutch celebrity, appearing in advertisements, hosting television shows and writing scores of blogs and opinion pieces for newspapers and magazines, Grunberg has refined a knack of being in the game without turning into a pawn.

His first novel, Blue Mondays, was published when he was 23, an achievement that would lead most to prepare for more success. But Grunberg had to be told to write another novel, and he seems to need constantly to remind himself to keep going.

After being kicked out of school at 17, he failed to establish himself as an actor. Instead of retiring to a bar job, Grunberg became a publisher devoted to translations of non-Teutonic German literature. The company fared so poorly that he was unable to sell it when the debts mounted up. One prospective buyer turned him down by taking Grunberg to dinner and letting the short, wiry bespectacled kid entertain him.

'At the end of that dinner he said he wasn't going to buy my business. But he told me that I should write a novel. I had written some plays before, but mainly because I wanted to be an actor. I'd had a lot of failures. I knew that failure was part of life, but I wasn't going to start thinking of myself as an author. He said, 'You can do it'.'

Grunberg still can't fully think of himself as a writer, and he likes to be reminded that failures make the most interesting moments. The best place for that is New York. 'Until I left, Amsterdam was the centre of the world for me, so it's nice to get out of the city, to see it from the outside. Many things that were obvious and not discussed turn out to be worthy of discussion.

'New York is a very open city. One of the things I liked about it is that I didn't feel like a tourist there. I don't feel I'm a New Yorker - even someone from Washington, DC, is considered a foreigner there - but within a couple of weeks I had the sense that many people were from outside. It's one of the few more or less successful melting pots.

'Writing from abroad is a very healthy experience for any author. My first novel came out a year before I arrived in New York. In that year I was on television and in the newspapers. Amsterdam is a small place and I started to become a known figure - people were recognising me in the streets.

'I don't hang out with many authors. They're tiresome. All they want to talk about is agents and sales and book covers. Why would you want to hang out with people who do the same thing as you?

'It's nice for an author to be anonymously waiting on tables. You observe better when nobody is observing you.'

Writer's notes

Genres Fiction, essays, short stories, journalism

Age 36

Born Amsterdam

Lives Dublin and New York

Latest book Tirza (2006)

Other works Silent Extras (novel, 1971), Saint Anthony (novel, 1998), The Comfort of Slapstick (essay, 1998), Phantom Pain (novel, 2000), The Fourteenth Chicken (screenplay for film released in 1998), You Are Also Very Attractive When You Are Dead (play, 1998), In Praise of Mankind (contemporary reworking of Erasmus' The Praise of Folly, 2001), The Story of My Baldness (novel written under the pseudonym Marek van der Jagt, 2001), Amuse-Bouche (short stories, 2001), Gstaad 95-98 (second van der Jagt novel, 2002), The Asylum Seeker (novel, 2003), Grunberg Around the World (short stories, 2004), The Jewish Messiah (2004, novel), The Technique of Suffering (lectures, 2005), The Grunberg Bible (a selection from the Old and New Testament, 2005), Fear Defeats Everything (a collection of stories from Eastern Europe, edited by Grunberg, 2005).

Next project A blog and a weekly story read for the radio programme The Evenings

What the papers say 'It's not light, but funny in a retch-in-the-gutter sort of way: It sours, like real literature. Many have recorded art's futile urgency, but rarely so blithely.' - Village Voice on Phantom Pain

Author's bookshelf

Marek Hlasko

'He's a Polish writer who's not very well known. He has written several short stories and novels. The Eighth Day of the Week is one of his most famous books. There's something about his anger. Even though he grew up in the 50s, in completely different times in communist Poland, he felt very familiar.'

Red Cavalry by Isaac Babel

'His short stories are the best I've ever read. They're based on his time as a Russian war correspondent in the 1920s.'

The Darkroom of Damocles and Beyond Sleep by Willem Frederik Hermans

'He's a very important author, and the best-known Dutch writer outside the Netherlands. But he should be better known inside the country. That way he'd have a better international reputation. It's funny that sometimes the perception of a country's great literature is different inside the place to how the rest of the world sees it.'

Frans Kellendonk

'He was a great Dutch writer. He's very hard to find because he's dead. As a foreign author, I know how hard it is to get translated. A dead author has no chance.'

Stendhal (Marie-Henri Beyle)

'He's great. I'm a big Stendhal fan.'