WHAT makes a wand magic? Two years ago that question would have been greeted with bemusement. Today, well, we all know, don't we? Unicorn hairs, phoenix tail feathers, and dragon heartstrings.

In the spring of 1997, when Bloomsbury sent me a draft of Harry Potter and the Philosopher's Stone, the revelation that an impoverished single mother had written this first novel over hundreds of lukewarm espressos in an Edinburgh cafe seemed like marketing hype ... until I read it.

You didn't need to be a gifted critic to know it was pure gold: that in 100 years' time, nine-year-olds will still be reading it under the covers long after bedtime. When we met (in the said cafe), Joanne Rowling was still living in a grotty rented flat. It was her first press interview.

Today her tale of a mysterious foundling who is rescued from neglect and abuse in dreary suburbia to embark on a series of stunningly funny and inventive adventures at a school of wizardry (set in Scotland), has made her an unlikely inter-national superstar.

Tonight, Harry Potter and the Chamber of Secrets, the first of six planned sequels, is favourite to win the £10,000 Whitbread Children's Book of the Year Award. There's an irony here. Until 1996 children's literature competed along with the four other categories (novel, first novel, poetry, and biography) for the main award but it was pointed out that a children's book in a generation just might have carried off the big prize. When Chamber of Secrets came out last year it went straight to the top of the bestseller list, outselling John Grisham, Terry Pratchett, and Delia Smith. So-called grown-ups are wild about Harry, too, and an adult edition of the second book is due out shortly.

Winning a drawerful of gongs, including gold two years running in the Nestle Smarties Book Prize, has done nothing to quell her nerves about tonight's ordeal, to be shown live on BBC2. "This business shouldn't be about awards but it's a vote of confidence and if there's the slimmest chance of winning I get terribly nervous," she says.

The competition is, indeed, daunting, perhaps not so much from tried-and-tested Robert Swindells or promising newcomer James Riordan, but the third finalist, David Almond.

Skellig, his gripping short novel for the 10-plus age group, has a boy finding an arthritic angel in a derelict garage and is a heady mix of zoology, pathology, mythology, neo-natal surgery, and William Blake.

There are some common threads between the Almond and Rowling books. Both feature flying in general (perhaps a universal childhood fantasy) and owls in particular. Both are strongly moral without being preachy. Both have strong appeal to boys.

Win or lose tonight, this is not the recognition Rowling values most. The truly magic moments have come from encounters with her young readers: watching a blind boy carefully feel his way through part of the first Braille copy of Philosopher's Stone; hearing about the dyslexic boy who had never read a book on his own, getting right through it without help because he was so desperate to find out what happened next; comforting the wee girl she met at the Edinburgh Book Festival when she sobbed: "I didn't want there to be lots of people here. This is my book."

"I know just how she felt. I still haven't got over the novelty of being in a roomful of people who know these characters," says Rowling.

At first it was also hard coping with the novelty of having both money (from a huge American advance) and time to write. It gave her her first serious bout of writer's block. The solution was to turn inwards again: "I kept telling myself, there's no point in writing for anyone but myself."

It happened when she was reworking the last quarter of Chamber of Secrets. Having resolved it, she feels the sequel is the better book. "It's a more dramatic ending. Philosopher's Stone has a more linear plot leading to one peak. Chamber of Secrets has several false summits before Harry finally works out what he's meant to do."

Now the third book, Harry Potter and the Prisoner of Azkaban, is ready for publication. It starts with Harry's 13th birthday and there's an attempt to run away from the dreadful Dursleys. Other plot detail is top secret. She's already working on the fourth.

Rowling still lives and sleeps Harry Potter, though she admits that by the end of book seven she may be ready for a change and has several ideas forming in her mind. Meanwhile, her life continues pretty much as before: "I'm still taking Jessie (her five-year-old daughter) to school and still cleaning out the rabbit hutch. I'm still writing when I can."

Though the grim flat has been swopped for a nice house down Morningside way, she still travels by bus. But, in an inversion of the life of her young hero, every now and then she is magically whisked off from grey suburbia to a quite different world. Last Friday, for instance, she spent the day with actor Stephen Fry, who is narrating the taped version of Harry Potter: "That wasn't something that used to happen between trips to Kwiksave!"

There's more magic in store this Thursday when interested "muggles" (Rowlingese for non-wizards) are invited to Platform 9 and Three-Quarters at London's King's Cross Station for the "transformation into paperback" of Chamber of Secrets. If the venue sounds unlikely, it only goes to show you haven't read the book. We won't get to travel to Hogwarts, Harry's wizard school, but Railtrack has promised to conjure up the Hogwarts Express.

In his introduction to Skellig, David Almond makes a comment equally appropriate to his fellow competitor tonight. "Writing," he says, "can be difficult, but sometimes it really does feel like a kind of magic. I think that stories are living things - among the most important things in the world." May the best magic win.