Iain Sinclair appears alongside Brian Catling at the Scottish Poetry Library

"The work I value," he explained, "is that which seems most remote, alienated, fractured." Sinclair started out as a poet, although today he is better known as a novelist and writer of non-fiction. Notable titles include his 1991 anti-Thatcher parable Downriver, which won the James Tait Black Memorial Prize. At the start of the millennium, he set off on an epic journey on foot around the M25, London’s outer-ring motorway. When published in 2003, his account, London Orbital, inspired a sub-industry of authors trudging round industrial and abandoned "edgelands".

Later this month, Sinclair will make a rare Scottish appearance at the Scottish Poetry Library, sharing the stage with friend and collaborator Brian Catling. The last time Sinclair appeared in Scotland was half a decade ago. Every year fans check the Edinburgh International Book Festival brochure, and every year they are disappointed.

"In the past," he says, down the line from his home in London's Hackney, "I’ve kept August free as I keep myself busy and I like to have one month in the year where I do as little as possible. And I’m not really keen on huge book festivals. If you take Hay, for example, it’s pretty grisly. It’s vast, it takes ages to get to the site, a wet field, and you don’t even get paid."

One might have wondered whether his reluctance to travel north was a testament to how psychically wed he is to London. Since his debut novel, 1987’s White Chappell, Scarlet Tracings, Sinclair has built his career on a sequence of books that explore London’s occult (in all senses) zones and history. In fact, despite a reputation as London’s "radical laureate", Sinclair isn’t even English. Born in Cardiff, he grew up in Wales, and is – on his father’s side – half-Scottish.

"My great-grandfather was from a village north of Aberdeen," he says, sounding English, with no trace of his Scottish ancestry. Firm, educated, reasonable, his voice is somewhat at odds with the visionary, mystical side of his writing. "He was taken up by a land owner when he was young as he showed himself to be a keen plantsman. The land owner sent him off to Ceylon while he was still pretty young to learn about tea-planting – a very Scottish thing to do – and then finally having made some money, he retired back to Scotland. His son, my grandfather, was brought up around Aberdeenshire, going to university there, as did my father, even though by that time, my grandfather had moved to Wales to work as a doctor. My father grew up in Wales, but he had a good Scottish connection. Growing up in Wales, my mother’s side of the family was dominant and I didn’t look into my Scottish side much."

Until now, that is. "I’m following up on my great-grandfather. In his old age, he went to Peru and had the most incredible expedition. He was looking into planting coffee in the depths of the source of the Amazon. It was a journey mapped and photographed and he wrote a book about it. I’m keen to research his story, possibly repeat his journey. If things work out, I’ll be going to Peru."

Born in June, 1943, Sinclair’s own journey took him from Maesteg, a coal-mining town where he grew up, to Trinity College, Dublin, where he encountered the young Michael Longley and Derek Mahon, whose poetry was entirely different from his own. Sinclair’s taste tended towards American experimentalists – Allen Ginsberg, Charles Olson, Edward Dorn – who remain his touchstones. Upon graduation, Sinclair moved to London, where he taught film-making and began to publish his poetry and others on his own Albion Press. Through teaching, he met Brian Catling, a student, although the dynamic was never one of pupil and teacher. "Brian was born fully formed." Catling, who went on to become a poet and performance artist, and is currently Professor of Fine Art at The Ruskin School of Drawing and Fine Art, recently scored a critical success with his fantasy novel The Vohrr, the back of which features warm words by Tom Waits, Terry Gilliam and Michael Moorcroft. Sinclair reports Catling has been working on the book for 40 years, since they first met.

When the college Sinclair was teaching at became a polytechnic, his job grew more bureaucratic, and he quit. Over the next few years, he and Catling paid the rent with a series of manual labouring jobs, such as at a brewery and a council parks department. The idea was that the jobs would leave both men time to work on their own projects; soon, they realised, the jobs were directing them towards what to write about.

"I took any odds-and-sods jobs I could find as long as they were in interesting places, particularly in the east [of London]. It was a great way of learning about the city from the ground up. I was getting into places, like the docks and breweries, which you normally never get entry to. These jobs revealed trace elements of an older London, it was like a second university. Most of what I’ve learned came out of these years."

One of his jobs involved cutting the grass in the grounds of semi-abandoned churches built by the 18th-century architect Nicholas Hawksmoor. The experience inspired his first major work, Lud Heat, an epic poem that floated the idea that Hawksmoor’s six London churches embody a "geometry of oppositions" that creates a "system of energies, or unit of connection, within the city". Mapping the churches, he noticed if you drew lines between them, they formed a pentacle, a dark star from which supernatural energies radiated.

Lud Heat was self-published, with no more than 200 copies printed. Sinclair’s theory might have gone no further were it not for Peter Ackroyd, with whom Sinclair had done readings. Ackroyd transformed Lud Heat into his creepy, bestselling 1985 novel Hawksmoor. Not much later, the graphic novelist Alan Moore incorporated Sinclair’s ideas into his Jack the Ripper epic, From Hell. By 2001, when From Hell was turned into a Johnny Depp movie, Sinclair’s ideas had gone unexpectedly mainstream.

Nor was this the last time Sinclair’s work, which initially appeared somewhat niche, took on a life of its own. His novels and ‘documentary’ narratives exploring London played a part in popularising ‘psychogeography’, which is, loosely, an attempt to penetrate the hidden reality of cities through urban exploration. Thanks to his efforts, psychogeography has moved from obscurity to an industry, taught at universities and fit for the Radio 4 documentary treatment. Today, the subject wearies Sinclair. "It’s moved so far from what psychogeography was intended to be when first discussed in the 1960s, it’s lost all meaning."

Sinclair has always had a conflicted relationship with his muse, London. On the one hand, the city is a gift to a writer who can see the ghost of the past barely concealed beneath the skin of the present. On the other, he has protested about the direction the city has taken, where money has moved in and ordinary Londoners have been dispossessed of their streets and their stories. He calls his next book, The Last London, which is published in the autumn by Oneworld, "the last in a sequence", the title hinting at his disgruntlement.

"I feel the city is so changed now it can no longer be written about in the terms I’ve always used. Post-Olympics, London is an enormous global entity that doesn’t connect up in any proper way with the rest of Britain. It’s an electronic, virtual city rather than a real place, and it needs to be dealt with in those terms; perhaps as a series of blogs or something short, sharp and insane, which I’m not going to do. As far as I and London are concerned, that’s it, which is why I’ve been talking about Peru."

If Sinclair is tired of London, he isn’t, to paraphrase Dr Johnson, tired of writing, particularly poetry. He continues to write and publish poetry, while his prose is peopled by poets. He continually returns to the likes of Vernon Watkins, Dylan Thomas, John Clare, David Gascoygne, T.S. Eliot, and above all, William Blake. Perhaps no other living writer works poets into his fiction and non-fiction as much as Sinclair. What lies behind this?

"Language has become so corrupted that everything is the opposite of what it sounds, whereas poets respect language enormously. They hoard and refine language. Poets are often difficult, dangerous and damaged, but I come back to them as figures of virtue in a complex world."

Iain Sinclair appears alongside Brian Catling at the Scottish Poetry Library on Friday, 24 March, 7pm. Tickets cost £10 (£8 concessions).