Weave got style: From Marc Quinn to Tracey Emin, tapestry is the art world’s latest love

Forget dusty old wall-hangings – tapestry has become the coolest art form around.

Think tapestry: what springs to mind? Fusty wall-hangings in stately homes? Grim scenes of wounded animals caught up in battle? Probably not modern art. But it may be time to think again, as a new breed of weavers re-imagine the art world's most laborious form for the 21st century. Last year, Tracey Emin exhibited a series of pieces, created with the help of West Dean Tapestry Studio, at London's White Cube, while Penelope's Labour – a show of new tapestries from artists including Marc Quinn and Grayson Perry – wowed crowds at the Venice Biennale.

Right now, massive, mind-bogglingly graphic woven epics by the celebrated photographer Craigie Horsfield on the theme of the circus are causing jaws to drop at Art Basel. Decades after artists like the Icelandic Dieter Roth, and feminist icon Judy Chicago – whose needlework and textile series, Birth Project, caused a stir in the 1980s – led the charge, the number of contemporary artists having woolly ideas is growing at a rate of knots.

So what is the draw of the loom? Adam Lowe of Factum Arte, the Italy-based studio that makes digital tapestries for the Louvre and the British Museum, believes a surge in interest over the past 10 years was inevitable: "Artists across the disciplines are attracted by the materiality and complexity of tapestry, particularly in a new age where the generation of the image – and often the output, too – is digital."

Like Grayson Perry's enormous Walthamstow Tapestry from 2009, a subversive Bayeux Tapestry of our time featuring Chanel handbags, Superdrug and a woman giving birth to the Devil, which was woven from digital files on a Jacquard loom (an automated, rather than human-operated, machine) in Belgium. It returns to the public eye at the opening of William Morris's London home next month, just weeks after six of Perry's new pieces (also digitally-woven, using a mechanical loom to create his images in tapestry form), The Vanity of Small Differences, launched at the Victoria Miro gallery.

But the human touch is by no means obsolete. A hundred years after it was founded in 1912 by William Morris's weavers, Edinburgh's Dovecot Studios is holding the torch for cutting-edge hand-weaving. Having been saved from closure in 2000, Dovecot has for the past four years occupied a vast space on the site of the city's first public baths. Now in its centenary year, the studio has been transformed beyond recognition.

On the day I visit Dovecot, the excavated ladies' pool is in the process of being styled for a fashion show. The day before, the Royal Scottish National Orchestra was playing one of a number of regular chamber concerts in among the looms, with guests looking on from the original gallery that circles what was once the main swimming pool; the walls are lined with abstract wall-hangings and colourful tufted rugs featuring geometric shapes and lighthouses, by artists including Alan Davie.

In August, as part of an ongoing series of centenary celebrations, this space will host a musical history of the studio, A Tapestry of Many Threads, co-written by creative polymath Alexander McCall Smith. It is all part of an attempt, explains Dovecot director David Weir, to break down the boundaries between artistic disciplines. "We've always occupied an unusual territory," he says. "Tapestry is a craft-based skill but the studio has always worked with contemporary designers," Weir, who used to work as a laywer, knows what he's talking about when he adds: "We don't live our lives in a single dimension."

Several feet below the original water-level in what was once a magnificent swimming pool, Naomi Robertson and colleague Jonathan Cleaver beaver away at their looms, producing pieces for Peter Blake and Peter Saville. Robertson replaced Douglas Grierson last year when the latter retired after 50 years as Dovecot's master-weaver and Robertson is making relatively fast progress on a series of woven versions of graphic images for Peter Blake, including a tapestry of his famous target symbol, beloved by Mods in the 1960s. Metres away, Cleaver is working on another piece called After, After, After, Monarch of the Glen, a group collaboration by Peter Blake, Peter Saville, and the Dovecot weavers (of which there are five). The piece acquired so many 'After' prefixes because it was reinterpreted by a number of artists: Cleaver's woven work is based on a print by Peter Blake of a picture by Peter Saville, which was based on Landseer's original painting, Monarch of the Glen. It is, Cleaver says, a modern take on the tradition of the stag in wall-hangings.

Working eight hours a day, Cleaver has been given three months to complete the work: "Initially we made samples to give Peter and Peter an idea of what we were thinking of doing; there were discussions about layout and lettering; you could do it lots of ways," he says. Eventually, the piece will be reproduced several times as a limited edition, and every piece will vary as each weaver painstakingly blends their own colours as they work.

It is a long slog, but one Dovecot director David Weir says a computer cannot hope to match: "Handmade tapestry is a thought process, everything is slow and deliberate... A machine can't replicate the human touch, the happy accident or the editorial decision." Adam Lowe, whose Factum Arte studio have also made digital tapestries for Perry and Quinn, disagrees: "Traditionally, the arts have been defined by their medium: printmaking, metal-working, painting... We are now in an age where we can take one sense and transform it into another using computers. Just look at the transformation of sound into light in discos."

"As a craftsman and an artist, the point is to build bridges between processes and ideas, and the reason weaving caught on is exactly that, because it is something many artists can do," Lowe adds. Digital tapestry is certainly more cost-effective than handmade – a copy of Perry's Hold Your Belief Lightly, for example, will set you back a relatively affordable £950.

By contrast, Dovecot's prices range between £5 and £15,000 per square metre, depending on the size of the project and the level of detail. "Because of the skill involved and how labour-intensive it is," Weir admits, "tapestry's most prized asset is its biggest obstacle: few people can afford it." It was ever thus: on his deathbed, Henry VIII was considered the world's richest man, based not on his stash of gold or silver, but on his inventory of woven masterpieces. But this rather expensive sense of tradition remains part of the appeal, Weir says: "When the rest of the world becomes increasingly challenging, there is a retrenchment to what is true, respecting the values of craftsmanship and making."

Today, the bulk of commissions for Dovecot still come from corporate collectors such as PepsiCo, which commissioned a piece by Frank Stellar, now hanging in its HQ in New York, and Rolls Royce, IBM, and the London Stock Exchange. While public buildings are still key clients – a 7mx7m Ron Kitaj/Dovecot piece hangs in the central atrium of the British Library, while Castle of Mey, woven for the Queen Mother in the 1950s, takes pride of place in her Caithness home – the number of private collectors, Weir insists, are increasing, with "rich yachtsmen" among a new breed of collectors chasing after the prestige a magnificent tapestry still affords.

However, with the price of wool sky-rocketing (thanks to increased world-wide demand) and with misconceptions about the art form still rife, the life of the modern weaver is still not perfect. "The biggest problem," Weir says, "is getting recognition as an artist in your own right." One of Hockney's first observations on a collaboration with the Dovecot weavers in the 1970s was not well-received, he adds: "Hockney complained that one line had taken three weeks. After a number of conversations, he learnt that collaboration is about a dialogue, about creating something between the designer and the weaver's individual visions."

In order to prove that they are more than mere technicians, in 2008 Dovecot asked its employees to create their own pieces in response to their new site. The results are dazzling. At the front entrance, Naomi Robertson's portrait of a female bather hangs opposite a colourful, more impressionist, piece by Douglas Grierson, in which their former master-weaver depicts a number of artists, including Hockney and Monet – alongside Damien Hirst's formaldehyde shark – in a brightly-coloured work.

"Sometimes I wonder," Weir admits, standing next to a mannequin dressed in a neon-pink woven corset, "what would William Morris's weavers have made of this?" His instincts are that they would have approved.

Dovecotstudios.com