'At the time we had no idea that it would become so big, and the fact that I'm still talking about it 40 years later just amazes me,' says Ken Scott, who co-produced the album with Bowie. 'Rock music was still young then and nobody thought their albums would be important in another 40 years.'

His memories of the two weeks of recording sessions are charmingly work-a-day. But Ziggy Stardust proved to be anything but. With the hit single Starman, live favourites Moonage Daydream, Hang on to Yourself and the raunchy title track, Bowie created a rock'n'roll otherworld of 11 loosely linked songs that dealt with societal decay, paranoia, and, of course, aliens.

'It was not written as a concept album,' explains Scott, who also worked on three other Bowie albums and as an engineer on The Beatles' White Album. 'There were three or four songs that were obviously connected, but the album was simply a collection of great songs that went well together.'

Ziggy made his greatest impact onstage. Bowie drew on his background in dance and mime to assume the role of the space rocker in dazzling concerts full of dramatic costumes, drenched in elaborate lights. The band, The Spiders From Mars, featured Mick Ronson, Trevor Bolder and Woody Woodmansey dressed just as flamboyantly. Rock theatre had arrived and concerts would never be the same again.

'Gigs became much more sophisticated in the 1970s and Bowie was the catalyst for that,' says Paul Fischer, a professor in the Department of the Recording Industry at Middle Tennessee State University in the US. The music 'wasn't sterile or polished. It suggested there was something really heartfelt there, something was trying to be expressed'.

Ziggy was a distillation of Bowie's artistic ambitions, a blend of performance art and music in which he explored his growing obsessions with cosmology, quasi-religion and societal decline. But Bowie didn't go into the studio with the Ziggy persona fully formed, Scott says: 'That developed afterwards. On stage and over the next couple of albums, David really brought the character to life.'

Thematically the album was in stark contrast to the flower-power optimism of the decade that had just ended. But Bowie's own explanation of its concept in a Rolling Stone magazine interview with author William S. Burroughs is muddled, to say the least.

Ziggy Stardust, he explained, is a rock star who turns prophet after being told in a dream that a race of aliens - the Starmen - will soon arrive to save the world. Ziggy is hailed as a messiah but is eventually destroyed when the extra-terrestrials assimilate his body.

Though half-baked, the story touches on the popular themes of the time: a sense of impending doom amid an intensifying Vietnam war and nose-diving world economy; cold war paranoia; the first warnings of a looming environmental catastrophe; and a fascination with alien life.

'There were a lot of people with dystopian visions of the future and this was one artist who was buying into that,' says Fischer. 'This was not Ziggy, but Bowie, saying the world is going to end. There were enough concerns and anxieties in the world that many people took those words as gospel.'

Pale and stick-thin in garish clothes, platform boots and with a shock of red coiffed hair, Bowie played the role of Ziggy to amazed audiences. 'The Ziggy period is the one that most audiences like most,' says 48-year-old Paul Henderson, an electrician who at night transforms into the frontman of Aladdin Sane, one of Britain's most popular David Bowie tribute acts. 'If people do come along dressed in costume, they come as Ziggy.'

Bowie's first appearance as Ziggy on British television, singing Starman on BBC's Top of the Pops in July 1972, was a seminal moment in pop history. It was 'like Kennedy being shot, [but] for another generation,' Robert Smith, frontman of The Cure, remembered in Never Enough, Jeff Apter's biography of the British alternative-rock stadium fillers. 'It was really a formative, seminal experience.'

Echo and the Bunnymen frontman Ian McCulloch echoes similar sentiments in the same book. 'As soon as I heard Starman and saw him on Top of the Pops I was hooked,' McCulloch says. That 'performance changed ... lives'.

Ziggy Stardust regularly features in lists of the all-time best albums and has a five-star rating from the popular Allmusic and Blender music websites. But it sold less well than its fame suggests, peaking at number five on the British album charts and 75 in the US Billboard LP listing.

Until then, Bowie's career had been limping along unspectacularly since the mid-1960s. His only previous chart success was the single Space Oddity, which rocketed up the British hit parade in 1969 on a wave of space fever around the time of the first moon landing.

There was no guessing how big Ziggy would become. 'It was just another job, really,' says Terry Pastor, the artist whose inks gave life and created an icon out of the drab photo that adorned the album's cover. 'Trevor Bolder told me that when they recorded it they didn't even know if it would sell.'

Bowie extended his nightmarish vision on his next album, Aladdin Sane, and took the theme to its logical conclusion on 1974's Diamond Dogs, a creepy account of an Orwellian future. Two years after Ziggy Stardust's release Bowie buried his alter-ego. But Ziggy lived on. Rock theatre became the norm and artists began playing around with stage identities.

Also, Ziggy's androgyny (and Bowie's open bisexuality) opened the gates for a torrent of cross-dressing pop stars. It also made it easier for stars such as Elton John, to admit their homosexuality.

The album is now seen as an iconic package of music, image and cover art, such that Pastor's sleeve was featured in a series of British postage stamps celebrating British music. 'That really was a surprise,' Pastor says of what is considered a great British honour.

'He didn't look that flamboyant in the photo - I gave him the lurid colours people associate with that cover,' adds Pastor.

A plaque commemorating the album was recently placed at a building in Heddon Street, London, where the cover photo shoot took place.

There is a film of the Ziggy show that features Bowie's last performance of the character. But rumours still swirl of a Ziggy movie proper, even after Todd Haynes went ahead with his own version in 1998's Velvet Goldmine.

'Ziggy Stardust brought lots of things together in one album - the music, the themes, the staging,' says Fischer. 'Other people have done each of those individual elements better, but Bowie was the first and so far only person to put them all together so well.'