Directed by Daniel Stamm. Starring Patrick Fabian, Ashley Bell, Iris Bahr, Louis Herthum, Caleb Landry Jones 15A cert, gen release, 85 min

The Last Exorcism is a finely crafted psychological horror film with characters and effects that get under your skin, writes DONALD CLARKE

YOU MIGHT quite reasonably argue that there was nowhere left to go for the possessed-child school of horror. The Exorcist, Rosemary's Baby, The Omen, The Innocents- those devilish kids have been garrotting babysitters for generations. Similarly, you might groan at the thought of another shocker told via the medium of mock documentary. Cannibal Holocaust, The Last Broadcast, Paranormal Activityand The Blair Witch Projecthave all set their picks to that dwindling seam.

So, do we really need T he Last Exorcism? Yes. Unquestionably, yes. Presented by Eli Roth, creator of the Hostelfilms, the second feature from Daniel Stamm manages to honour genre conventions while forging its way into previously unexplored territory.

The film is superbly well acted - every passerby spits out earthy energy - and contrives to keep the viewer in an uncertain state until the final few seconds. Most impressively for a film in its genre, The Last Exorcismoffers us fleshy, flawed characters with psychological nuances that constantly undermine our sympathies and preconceptions.

The story focuses on a preacher who has lost his faith. Despite his doubts, Cotton Marcus (Patrick Fabian), a good-looking charmer with a taste for amateur conjuring, continues to perform exorcisms throughout the American south. In the course of the film, we see him preparing recordings of howling demons and counting wads of money donated by relieved parents.

On paper he reads like the worst sort of charlatan, but from the start it's clear that Cotton is sincere in his belief that he is providing a service. Performing the rite can, he reasons, lead psychologically troubled folk towards a calmer place. Besides, if he doesn't do the business, some less caring, more unhinged exorcist will take his place.

Keen to propagate his views, the reverend has invited a camera crew to record his last-ever exorcism. The subject is Nell, a young girl from a remote corner of Louisiana. Mysterious events are afoot: her dad's cattle have been dying in grisly fashion, and bloodstains on Nell's nightdress suggest that she (or some demon within) might be the culprit. Cotton sets up his equipment and reads out the Latin text, but, after initial success, Nell begins behaving ever more strangely.

Ashley Bell is quite magnificent as the disturbed girl. Contorting her body into inhuman knots, speaking in distant, coolly macabre voices, she is just otherworldly enough to challenge Cotton's - and our - assumption that her behaviour is the result of illness rather than possession.

Yet, for most of its duration, the film is firm in arguing that our rational fear of madness is more debilitating than our irrational fear of demonic possession. Madness may be incurable. Possession can be dispelled with the incantation of a few flowery verses.

Deprived of any technical pyrotechnics, the film-makers exploit the complex dynamics between the characters - Is Nell's father an abuser? What's with her withdrawn brother? - to forward the increasingly fraught narrative. The juggled camera allows moments of ambiguity. The sound design features creaks and surges that may or may not be audible to the characters. Barely perceptible forces insidiously urge us to ponder an array of equally unattractive solutions to the film's core riddle.

It is, alas, hard to deny that the ultimate resolution breaks the well-maintained mood and elbows the picture towards a different class of melodrama. But a second viewing of The Last Exorcismconfirms that the script is utterly honest and fair in its scene-setting. Play close attention and you will detect a succession of bold signposts indicating the plot's ultimate destination. It is, however, a testament to the skill with which the picture is assembled that the clues will, for most viewers, flit by entirely unnoticed.

Easily the best horror film of the year.