Magic carpets: the modern art of tapestry

The tapestry unfolds, piece by piece, until its dimensions are revealed. At nearly five metres high and wide, it could cover the side of a small house.

The proportions are huge, but the intense detail of the surface is overwhelming. It is composed of endless rows of tiny stitches in varying shades of grey, like a pencil drawing. In one corner, there is a museum with glass walls, and it is amazing to see how wool has been used to depict a transparent surface. The overall picture is a fictional landscape, like the moon's surface, littered with structures that recall Henry Moore sculptures.

This stunning tapestry, Villa Joe, was designed by the British artist Paul Noble. When he first saw the finished work, he was so astonished by it that he stared at it for two hours. "It was amazing," he says. "The detail is so fine in my drawings that to translate them into weave they had to double up the scale. But it really works. It's like pixelation, and there's a tension created by the way that the information is locked into minute horizontal and vertical lines."

Villa Joe was commissioned by Chris and Suzanne Sharp, the owners of the successful Rug Company. Three years ago, they asked 14 artists to design a work for a tapestry. The artists they chose range from well-known Brits such as Grayson Perry and Peter Blake to less-established international artists such as the Franco-Brazilian collective assume vivid astro focus. The artists are contemporary, yet tapestry design is steeped in tradition. "It's a lost art," says Sophie Culler, one of the organisers. "In the Renaissance, artists queued up to have works made into tapestry."

Culler worked with the artists, talking through designs and coordinating with the weavers based in Qingdao, just north of Shanghai. "It was a long thought process and a collaborative effort. There was a lot of sampling and talking, explaining what is available and which thread should be used," she says.

The results are a diverse and captivating mix. Perry's design is an unsettling portrait of his teddy bear Alan Measles. A suicide belt is strapped around Alan's waist and he is brandishing a Kalashnikov. There's a psychotic grimace on his face as he stands one foot atop each of the Twin Towers while the aircraft crash into the buildings beneath him. The imagery is the chaos and turmoil of terrorism. The Israeli West Bank barrier snakes across the surface. Osama bin Laden appears on a computer screen, and there are corpses, embalmed bodies and a Tube train surrounded by coffins. Perry collects Afghan war rugs and is inspired by old British political banners. "Vote Alan Measles for God," reads the slogan. "He Will Save Us." Red, yellow and blue clash and scream.

Perry's design is in angry contrast to the cool romanticism of Gary Hume's work, Georgie and Orchids, which is based on a sketch of his wife. Hume is best known for sensual paintings using household gloss paint in blocks of colour. This portrait of his wife is made up of lines of black stitching with delicate strands of green foliage hanging down in the foreground. There is a chaos of line because it is three portraits drawn one over the other. In one, she holds her hands in her face; in another, she stares out into the distance. Large areas of the surface are blank and quiet. There's a soothing tone to the piece.

Some works translate into tapestry better than others – precisely why is hard to gauge, although the elaborate, decorative designs seem to show off the sensual, tactile nature of the craft best. The American artist Fred Tomaselli submitted a design from an existing painting, After Migrant Fruit Thugs, which shows two birds in dazzling colours sitting on branches in a dark and magical wood. He uses unorthodox materials to make exquisite paintings that are rich with colour and texture. As a tapestry, the colour and intricate designs work beautifully. The background is dark and littered with intense drops of purple silk. The birds have been woven in silk and their colours stand out with the sheen of real feathers. It's gorgeous to the eye.

Like Perry's, Gavin Turk's design has a serious undertone. Mappa del Mundo is a map of the world in which the land mass is made up of the detritus of rampant consumption. The earth is covered in trash. Flattened cans of Foster's lager, Pepsi and Coca-Cola, cigarette packets and empty crisp packets litter the surface. The outlines and colours are sharp, but the narrative seems bleak. Not that Turk sees it this way. "Tapestries remind me of castles and the aristocracy, so I'm dealing in opposites, using the highest form of craft to elevate the status of rubbish and raise questions about value. Companies spend millions of pounds on developing a brand name and logo and on packaging, which is often more expensive than the product. So when a can is chucked away and gets run over, what is it worth and whose responsibility is it?" he says.

Blake's graphic design for his tapestry has none of the polemic or high drama of some of the others, but it is no less fascinating. His square tapestry uses all the letters of the alphabet in order. It's like a children's ABC quilt. Blake studied typography in the 1950s and has a depth of knowledge of fonts. Each letter conveys a mood and moment. The X is modern, using synthetic silk in candy pink and turquoise – it's bright, optimistic, man-made. The F is a military letter in plain-black wool with a neutral background. It's solid, unfussy and practical. There are other elaborate letters that use gold thread and ornate curlicues, the design influenced by old texts and manuscripts.

Of all the designs, Francesca Lowe's tapestry seems closest to the tradition of dark, gloomy hues and philosophical narratives. Called Trump, her tapestry has the feel of an Old Master painting and depicts an epic struggle between two male forms, one dark, one light. Limbs entwine and muscles strain over the surface and a forbidding cloud hangs over the two. Rather than a battle between good and evil, Lowe prefers to think of it as battle of egos, as figures who represent two states of being. It is based on an earlier painting by the artist, but she was astonished by the transformative power of tapestry and the craftsmanship of the weavers. "It has gained an ethereal beauty," she says. "I'm blown away by their abilities. It looks amazing."

Demons, Yarns & Tales: Tapestries by Contemporary Artists is at the Dairy, London WC1 ( www.bannersofpersuasion.com ) to 22 November