A round peg in a square hole

As his parting shot as director of the National Theatre, Richard Eyre has taken the alienating Olivier auditorium and transformed it into a theatre in the round. Nobody would have approved more than Bertolt Brecht.

There can be a variety of reasons why an actor should make an entrance at a run - ranging from the obvious ("My character has been running to get here") to the downright devious ("I'm far too old to be playing this part but maybe, if I put a sprint on, I'll look more youthful"). At the National Theatre's Olivier auditorium, the reason is usually more straightforwardly pragmatic: the stage is vast, the wings leave off yards from where the sightlines kick in, and any actor wanting to hit his cue on time (and in view) really has no choice but to leg it across the no man's land in between. Which is why, at this particular address, so many of the playwrights seem to have littered their scripts with the stage direction "Enter running".

Not any more. Richard Eyre will leave the National on 1 October, the opening night of his production of Tom Stoppard's new play about the poet AE Housman, but before he goes, he's embarking on what he agrees is his last big adventure. He has rebuilt the largest of the three auditoria. Nothing permanent, you understand, but for the next three months you can see two modern classics staged in the round. In May, Jeremy Sams will direct Peter Weiss's notorious 1964 play The Persecution and Assassination of Marat as Performed by the Inmates of the Asylum of Charenton under the Direction of the Marquis de Sade (better known as Marat/ Sade), but tonight sees the premiere of a new version of Brecht's The Caucasian Chalk Circle directed by Theatre de Complicite's Simon McBurney.

When Eyre first transferred David Hare's Racing Demon into the Olivier he added seats on stage giving something of the effect of an in-the-round staging and has been dreaming of the possibility of doing it for real ever since. McBurney has loved Brecht's play from the time he performed in it at school, so when Eyre offered it to him, he wasn't about to say no, despite misgivings about the space. "Every time I sit in the balcony, I feel completely alienated from the show. I believe there is a fundamental design flaw in that theatre. It always struck me that it had the potential for a much more human space than it was giving off." His solution was to suggest closing the balcony, replacing most of the lost capacity with the audience seated on stage. "I fully expected Richard to say 'sod off' but, on the contrary, a wonderful smile spread across his face and he said 'this is really exciting'."

In common with most publicly subsidised organisations, the National's Arts Council grant has remained frozen at standstill for four years, which represents a cut of well over pounds 1m in real terms. Hence, in part, the decision to revive Eyre's outstanding production of Guys and Dolls. Its tumultuous success notwithstanding, finances are still tight, putting an end to McBurney's original plan to raise the seats in the lower stalls so everything would be on the same gradient for perfect sightlines. Despite that, the transformation of the space is a triumph.

Even amid the semi-organised chaos of a technical rehearsal, entering the Olivier from what used to be the back of the stalls is bizarrely disorientating. The giant arena, which you expect to see ahead of you, has gone. Instead, a canopy hangs over a circular stage surrounded by giant, curved seating blocks that not only mirror and blend into the permanent seating, but also look as if they too have been there forever. Sams is not exaggerating when he describes this dynamic new space as "epic, but oddly, also quite intimate. It's really beautiful...", and alive with possibilities.

For McBurney, The Caucasian Chalk Circle took Brecht back to the pleasure of theatre. The play, based on an ancient Chinese tale in which two women both claim the same child, climaxes in a tug-of-love with the child in the centre of a chalk circle. Having the audience gathered around the action makes complete theatrical sense. "If you tell a story in a big group of people a circle naturally forms. Addressing a flat line of people never occurs for the simple reason that with a circle wherever you look you'll catch somebody's eye. Even if your eye has not been taken, you are observing the contact between you and your audience." McBurney has been working this way since his student days. "I did a lot of street work when I was in Paris and when we toured round the world. I got thrown into jail in Greece for performing, but I love it. You're here (he leaps up to demonstrate) but you're constantly aware of people watching your back so you go like that (whipping his head round through 180 degrees) to catch someone behind you. That constant sense of surprise is in The Caucasian Chalk Circle as well."

Not content with directing, he's also playing the judge, and he illustrates the character working in three different directions in the space of a few lines. "The comedy comes from the different thoughts in those brief lines. Saying them in three different directions heightens it. The other thing I find in a circle is that you slip very much faster from being funny to tragic, or vice versa. It's something to do with the exposure of it, which means you are able to manipulate tone in a very strange way." There are specific dangers with playing in the round that both directors are keenly aware of. Actors can all too easily end up circling the stage which achieves nothing except to blur the proceedings. Playing across the space of diagonals is the classic solution. The results can be extraordinarily dynamic by comparison with proscenium-arch stagings in which actors can become very stuck on a horizontal line. "You can't do that if you have people behind you," observes McBurney. Most of all, though, in the round releases energy. "It does something very invigorating to movement and space. You simply cannot allow yourself to get locked into one position. It has to keep moving."

With Marat/ Sade, Sams had the added technical problem of a cast of 30, none of whom leaves the stage, but he's confident about Eyre's smart choice of plays. "They both have a slightly presentational quality. In this case, it's presentation of work by the asylum. They try and put on a play and also show the advantages of other forms of therapy, the water therapy which goes on in Marat's bath." A show of work, yes, but one which the Marquis de Sade has subverted for his own purposes, to manipulate the event into some sort of madness for his pleasure and, possibly, for the rehabilitation of the patients. "Possibly not," grins Sams. "He was, after all, the first sadist."

It's the audience's relationship to the show-within-the-show within the new circular configuration that excites Sams. "Half of what I'm trying to do is get the audience not to look at the mad people as if they're looking at a freak show. I want them to think 'there are people in pain and fear of various sorts and I kind of know what that is, although I'm not there'. What I'm after is empathy, so it really helps that the surrounding audience is physically focused down on the production."

In a proscenium theatre, with an orchestra pit dividing the actors from the auditorium, the audience remains safe and separate. Putting the public in a circle around the action forces the audience to consider their relationship not only to the stage, but even more importantly, to each other. There is a highly charged sense of watching people watching, an engrossing sense of complicity. With Marat/ Sade, it's essential. As Sams explains, the original plays at Charenton really were performed before a paying public. "Posh audiences would come to see the loonies act. They paid a lot and they came a long way to scoff and they went away amazed." He looks up, impishly. "The National Theatre audience can stand in for that very conveniently."

'The Caucasian Chalk Circle' opens tonight, 7pm, at the National Theatre, London SE1, and continues in rep. 'Marat/ Sade' opens in May. Booking: 0171-928 2252