Benjamin Britten's Peter Grimes, his first full-scale opera, is a complex and deeply affecting masterpiece. Monumental in scale, it is also intricately etched with human detail. Britten's writing evokes sea, shore and the individuals who populate both, moving eerily from grand soliloquy to village chatter. The title character is the first of the Britten's series of operatic outsiders, a troubled and naive fisherman locked in a vicious cycle of violence and self-hatred which is fuelled by village gossip and intolerance. As realised by Britten, Peter Pears (for whom the role was written) and librettist Montagu Slater, Grimes is far more ambiguous than the brutal villain of the George Crabbe poem, The Borough, from which he is drawn. Crabbe's creation he may be, but Britten adopted Peter Grimes and made him his own.

Director Neil Armfield has set the opera in the time of its writing (the early forties) rather than Crabbe's nineteenth century, and he stages it entirely within a village hall - the hub of Borough activity and gossip - recreated with painstaking realism by designer Ralph Myers and lit with breathtaking naturalism by Damien Cooper. Taking his cue from the libretto's inclusion of Dr. Crabbe himself as a silent character, Armfield has significantly enlarged the role. Crabbe observes silently throughout, part ghost and part father, and it is to him that Grimes's distracted utterances are directed. This directorial touch will perhaps divide audiences, but even setting it aside, Armfield's success here is significant: his gift for bringing music and theatre lucidly together is arguably unmatched by any other of the company's regular directors.

Grimes was to have been conducted by the company's music director, Richard Hickox. Hickox's sudden death left a gaping hole in the season, but Opera Australia has found a worthy replacement in Mark Wigglesworth, Hickox's compatriot and colleague. Wigglesworth leads a compelling reading of Britten's unsettling score, navigating its many layers with precision and an ear for its poetry. He strikes a robust balance between pit and stage, supporting his singers while remaining unafraid to raise the orchestra's own voice as forcefully as required.

Stuart Skelton as Peter Grimes gives a performance of explosive intensity. His heavy-set, shambling Grimes is ogre one minute, gentle giant the next, and he sketches out each facet with equally unflinching honesty. His voice is massive, a true Heldentenor, but plumbs extraordinarily lyrical depths: the pianissimo beginning to his "Now the Great Bear and Pleiades" is a moment of finely-wrought beauty; his mad scene, an astonishing piece of visceral virtuosity.

English soprano Susan Gritton is Skelton's radiant partner as Ellen Orford, her lustrous soprano rises gorgeously through the opera's ensembles while retaining an earthy quality which adds real power to its lyricism. Her Embroidery aria is especially moving, marrying grief to gorgeous tone with shattering results. Peter Coleman-Wright's Balstrode is in his own way just as beautiful. Beneath the surface of this grizzled sea-captain beats a kind and noble heart: Coleman-Wright's sensitive acting steadfastly avoids cliché and he sings with an assured depth of sound which, gaining in richness as the evening progresses, seems at times to anchor the whole piece.

Catherine Carby is a delightfully dubious Auntie, the glint in her eye belying a warmth and sad wisdom which shows itself in the women's quartet. Lorina Gore and Taryn Fiebig are a delectable pair of nieces, singing oh-so-sweetly in their pretty printed frocks. Tenor David Corcoran sounds better than ever as the Methodist Bob Boles, whose bombastic preaching is neatly offset by Kanen Breen's prim Reverend Adams. Andrew Moran's (Ned Keene) jaunty presence is welcome relief, while Richard Anderson's Swallow strikes just the right note of pointed officiousness, and Jud Arthur sings with stylish swagger as the carrier Hobson. Elizabeth Campbell is excellent as the interfering Mrs Sedley (a self-proclaimed respectable lady with a laudanum addiction), the acidic edge to her voice lending real malice to her otherwise ridiculous presence.

Peter Grimes presents a significant challenge to its chorus, who must convincingly embody the busy population of this seaside village while singing some of the piece's most striking music. Opera Australia's chorus succeeds on both counts: their diction and ensemble singing are of their usual high standard, as are occasional solo passages, and they are a persuasive collection of actors. Acting plaudits are in order too for the production's two silent stars. Nicholas Bakopoulos-Cooke is heartbreaking as the apprentice John, while Peter Carroll's Dr. Crabbe is so nuanced and vital a part of the production, it's almost difficult to believe he's not a part of every Grimes.

Peter Grimes is an extraordinary opera which requires extraordinary forces. That's what Opera Australia has assembled - but that assembly is only half the story. There is far more to this Grimes than a collection of individual triumphs, or even the thrill of a collective one. Opera Australia's slogan, "Life amplified", has rarely rung as true as it does in this production. There is here a sort of alchemy: a stroke of dark and devastating magic by which all the nuts-and-bolts mechanisms of the lyric stage are rendered invisible, and what's left seems to be nothing less than life itself. It might have taken them until the end of the season to do it, but with its new Peter Grimes, Opera Australia has produced what is unquestionably the finest show of the season.