With lightning speed, Joanne Rowling's first book has propelled her from struggling single mother to prize-winning children's author. She tells Ann Treneman that it's as if she'd stepped into one of her own stories ...

Joanne Rowling is a star now but you can tell that she does not really believe it yet. Just a few years ago she was penniless single mother living on benefit in a grotty flat in Edinburgh. Now, at 32, she is well on her way to being a rich and famous children's writer. Her book Harry Potter and the Philosopher's Stone has sold 30,000 copies - a phenomenal number for a children's book - and this week it won the Smarties Book Prize. She is thrilled but, when we meet, she seems more star-struck than star-like.

"I never, ever dreamt this would happen. My realistic side had allowed myself to think that I might get one good review in a national newspaper," she says as her four-year-old daughter Jessica plays with a Hercules doll next to her. "That was my idea of a peak. So everything else really has been like stepping into Wonderland for me."

And that was no small step in a number of ways. Joanne has been a secret scribbler all her life - "I remember vividly writing a book when I was five about a rabbit named Rabbit who had the measles" - but she never saw herself as a writer. Her scribbles were for her eyes only and the only people who even knew about it were those who lived with her and saw how the paper kept stacking up. It was a compulsion that was to carry her through her childhood in the Forest of Dean, her university days at Exeter and, later, through endless lunches when she worked as a secretary and a teacher.

"It was a secret. People at the office used ask me if I was coming down the pub and I would say that I was going shopping. And then they would ask me what I had bought! I just felt embarrassed about saying, well, actually I'm writing a book. I've met so many people in bars who say they are writing a book and it means that they've written down a few ideas in a notebook."

In Joanne's case, however, what it means is books as in plural. At the moment her drawers are full of two novels for adults - "I must remember to burn them before anyone reads them" - and boxes of manuscripts about Harry Potter, the boy wizard who is rescued by owls and attends the Hogwarts School of Witchcraft and Wizardry. Harry is magic and is certain to become a legend as the star of Rowling's whimsical novels.

The story of how Potter came to be is almost as engaging as the boy wizard himself. Joanne had the idea in 1990 during a train trip from Manchester to London. "It was extraordinary because I had never planned to write for children. Harry came to me immediately, as did the school and a few of the other characters such as Nearly Headless Nick, the ghost whose head is not quite cut off. The train was delayed and for hours I sat there, thinking and thinking and thinking." When she got home, she started to write.

She was still scribbling away the following year when she went abroad to teach English as a foreign language. There, she got married to a Portuguese journalist and had Jessica. The marriage didn't last and, when Jessica was just three months old, Joanne headed back to Britain with a suitcase full of nappies and Harry Potter adventures. She went to Edinburgh to visit her sister for Christmas and decided to stay. "I decided it would be easier to be utterly poverty-stricken in Edinburgh than London."

For the first time in her life Joanne did not have a proper job. She couldn't afford child care and for six months lived on benefit. "I decided this really was crunch time. I told myself that I was going to carve a book out of this mass of papers." Thus began an extraordinary - and secret - effort. "I didn't tell anyone. People would ask me what I had been doing and I would just say out walking. I think they thought I was very strange and possibly depressed. What I was actually doing was walking round town with Jessica in the pushcair. When she fell asleep I would run into a cafe and write for two hours."

I say that it sounds pretty strange. "I was aware of how barmy it sounded and I do think the few I told thought it was barmy. I think they thought: Oh my god, she's really on her uppers and now she wants to write a book!" She went to the library and looked up a list of children's book agents. She couldn't believe it when the first one she wrote to, Christopher Little, wrote back and asked to see the rest of her book. She read that letter eight times. "It was an extraordinary moment because it was a tiny speck of light at the end of the tunnel."

That speck soon started to glow and then glare. The book was snapped up by Bloomsbury and Rowling received a substantial advance. She is particularly pleased about winning the Smarties prize (ages nine to 12) as it is judged by both adults and children. The book has now been sold to eight countries - the American deal alone was worth some $100,000 - and Hollywood is interested too. "When the American deal came through, that meant security. It means that I can buy a flat. It means not worrying. The constant mind-blowing worry of wondering if you are going to be able to last the week without buying another pack of nappies. That is how it was and it is a horrible, horrible way to live."

Gradually she is adjusting to the good life. "I have my moments. The other day in Edinburgh I went to my favourite cafe to reread the edited version of the second Harry book (she plans seven in all). Jessie was in nursery, because now I have the money to pay for her to go to one that she likes. I had a sticky bun and a cup of hot chocolate and I had this moment of divine revelation. I thought I am the luckiest person in the world. I am now being paid to do what I have been doing my whole life for nothing. I can sit here and know that this book is actually going to be published. Then I suddenly realised: I am a writer. I'm being being paid for it now. This is not my secret shameful habit that I don't tell anyone about any longer."