Look out, here come the pagans. It's late May in central London and a man dressed as a tree, a witch in a velvet robe and a woman pretending to be a raven with a long black beak are dancing through the streets of Holborn, with several hundred others, moving to the rhythm of a dozen loud drums. They could wake the god of thunder with their noise but it's OK, the people at the back with the broadswords and shields are followers of Thor. This is a parade to celebrate pagan pride, and it would be wise not to get in the way.

"We are moving into a new time," says the leader, brandishing a huge set of antlers. "We are becoming more accepted. Paganism is reasserting itself."

Who is going to argue? Her name is Jeanette Ellis and she looks like the figurehead of a mighty galleon, cleavage pushing up out of a medieval dress (although her bottom half is mostly foliage). Ellis has been organising parades for more than a decade. "There has been such a dramatic change," she says, "in the way we are perceived."

Paganism is casting its spell over more people now than ever before in the modern age. There are said to be a quarter of a million practising pagans in this country, double the number of a decade ago.

That would make them more numerous than Buddhists (of which there are 144,500, according to the 2001 census) and almost as numerous as Jews (259,000) - and it doesn't even allow for the growing tribe of unofficial, instinctive pagans such as my friend Cath, who planned to celebrate the summer solstice in the early hours yesterday by "going out into the garden at dawn and just tuning in". At Stonehenge at least 30,000 people were expected to watch the sun rise in the company of the druids who see themselves as practising the ancient faith of pre-Christian Britain. For them, the sun is symbolic of one aspect of the "universal force which flows through the world and which can be encouraged to flow through us", according to Philip Carr-Gomm, founder of the Order of Bards, Ovates and Druids and author of the new Book of English Magic. The druids are only a small part of modern paganism, which encompasses a bewildering number of traditions or "paths", but central to them all is this idea of a divine force inherent in nature. It is an individualistic faith that encourages each person to respond in their own way, so you don't have to be a druid, or belong to any kind of order at all.

Away from Stonehenge, much smaller groups of people celebrate the summer solstice by gathering before sunrise in gardens or woods, on beaches or hilltops across the country, some for organised rituals and some, like Cath, just responding to their own understanding of a spirituality that seems to work best in the open air. Ask her faith and she says "pagan" straight away. She sees no need to join in with anybody else, but Cath is far from alone.

"What we believe is suddenly everywhere," says Bantu, a dreadlocked 29-year-old who planned to be on a hill in Wales when the moment came. He started to worship Gaia, the earth goddess, after going to a workshop at a climate camp. "Everyone's a pagan now."

Not quite, maybe, but the rise has been dramatic. The census in 2001 recorded 40,000 pagans, but the true figure may be higher. "Pagans don't like telling the government what they're up to," says Ellis. A decade ago Ronald Hutton, a professor of history at Bristol University, calculated that there were 120,000 people going to rituals or meetings (often in pubs) called moots. That was before Harry Potter and Buffy the Vampire Slayer, The Lord of the Rings, Charmed and Sabrina the Teenage Witch made pagan spirituality and mythology part of pop culture.

The Pagan Federation, which aims to represent all "followers of a polytheistic or pantheistic nature-worshipping religion", claims the number of adherents has trebled at least. That would mean there were 360,000 committed, practising pagans, putting them ahead of the Sikhs (329,000) and fourth behind Hindus (552,000), Muslims (1.5 million) and Christians (42 million, according to the census).

Hutton adds that there has been a much greater acceptance of pagan ideas among the wider public. "It is best to think in terms of concentric circles," he says, "from those who are initiated members of a group such as a coven, out to those who go to Stonehenge for a drink and a party."

The Pagan Federation's membership list includes druids as well as wiccans, practising modern witchcraft; shamans, engaging with the spirits of the land; and heathens, worshipping the gods of the north European tribes (including Thor). But then there are the neopagans such as Bantu, always visible at environmental protests, who wouldn't think of belonging to any kind of federation and who pursue a rainbow of revived, recreated or invented beliefs with nature at their heart.

All you have to believe to be a pagan, according to the federation, is that each of us has the right to follow our own path (as long as it harms no-one else); that the higher power (or powers) exists; and that nature is to be venerated. If you asked everyone in Britain if they agreed with those three statements, millions would put their hands up. At its loosest, paganism is beginning to look like our new national faith.

The circles can be seen widening in the most unlikely places. Nine years ago, Ray and Lynda Lindfield and their friends tried to start a pagan festival on the seafront in ultra-conservative Eastbourne in East Sussex, and were threatened with arrest. "It had to be pointed out that we had a right to practise our religion in public," says Lynda. Lammas is now one of the big local draws of the summer.

These public events usually include a re-enactment of whatever stage of the pagan cycle is being marked. In Eastbourne they needed some dancers to perform the cutting down of the male sun god, represented as the mythical character John Barleycorn, and so a morris-dancing group, Hunters Moon, was born. It is now the most fashionable side (as morris-dancing groups are sometimes known) in the country, having recently been hired to perform at a party in London for Tim Burton and Helena Bonham Carter, among others. It is also part of what amounts, in morris dancing, to a pagan coup.

The Morris Ring, which represents the hanky-waving sides everyone thinks of as morris dancers, announced in January that young people were not interested. That was news to Hunters Moon, and other recently formed, pagan-inspired sides across the country such as Wolf's Head and Vixen, the first gothic morris outfit, whose members wear mirror shades and look like the Sisters of Mercy.

Half of the two-dozen dancers at a recent Hunters Moon rehearsal were under 30, including teenage students. They hopped, they skipped, they smashed big sticks together until the splinters flew and then used them for gestures that were, quite frankly, rude. Hunter's Moon dance with blacked-up faces (not racist but medieval, they insist, having been a way for mummers to hide their identities from their daytime employers as they went door to door for trick or treat) and outfits that make them look like ragged crows that have mated with Hell's Angels. Not every member is a pagan, but they wear pentagrams and the dances include arcane elements such as the spiral. "Those that know what it is," says Armstrong, "know what it is."

Witchcraft is another driving force in the rise of paganism. Leading members of the Federation are part of this closed tradition that became public in 1954 when a retired civil servant called Gerald Gardner claimed to have been introduced to pre-Christian occultism by one of the last surviving covens. Their version of the divine force is embodied in a horned male god and a mother goddess, and their response to its energy all around us involves the casting of spells and incantations to influence real events. Gardner's critics called it fiction, but wicca now has 7,000 adherents, according to the census, which again is probably an understatement. What do you have to do to join? "If I told you, I would have to kill you," says Chris Crowley, a wiccan high priest who speaks for the Federation.That's a joke, I think.

His partner, Vivienne, has written acclaimed books on wicca, or at least on its public side. Wiccans believe in the ability to communicate directly with the divine by calling down the god or goddess to enter the body, which can involve going into a trance and allowing them to speak through you. The most common wiccan symbol is the pentagram, whose points represent the elements essential to life: air, fire, water, earth and the spirit that ties them all together. They see themselves as inheritors of the "wise craft" that led men and women to be ducked and burned in previous ages, so if you want to know their deepest secrets you have to prove you are sincere and committed. Joining a coven traditionally takes a year and a day. "It is a mystery religion," says Crowley. "You do have to be initiated."

Crowley is a head-hunter for public sector recruitment, and dresses in jeans and blue blazer. "We look normal," he says, "because we are."

Jeanette Ellis is not a wiccan but a "traditional" witch, who follows a path she found among her family roots in the west of Ireland. "I work with the Morrigan, a Celtic goddess." One associated with death and war (and ravens), I subsequently discover. "We do not target people in our spells," insists Ellis, who calls her home in east London her "covenstead". The 13 members meet when the moon is full. "People bring ideas for spells. If someone has split up with her boyfriend, for example, we may cast a love spell that will make her more confident and attractive."

She is not so shy about ritual and is able to explain why so many people on the parade are wearing knives, including those broadswords (with the police turning a blind eye). "That is the athame, a director of energy. It must not touch blood. There are no sacrifices going on." The knife is placed in a chalice to bless wine. She also describes the male high priest pushing the athame into a scabbard held by the high priestess. Hang on, this is all about sex, isn't it?

"There is a sexual energy, I wouldn't deny it," says Ellis, chuckling. "The sexual union happens within every ritual, usually symbolically." Usually? "It's not about orgies. Of course, after any full moon, if you want to go out into the garden and have ... that's fine, as long as you're a couple. You don't just go off with whoever you fancy." Do they ever do it as part of the ritual? Expecting a denial, I am surprised by her answer. "Some do. Less and less, I think. I don't know what other covens get up to."

Nobody does. That's the point. It's hard to join. (Once in, you presumably become as vulnerable to exploitation as any other member of a closed religious group whose initiated members are taught secret information by a caste of self-elected priests.)

Some wannabe wizards did go on to take an adult interest in the esoteric after reading Harry Potter, but the boy wizard's bigger impact has been in the adoption of pagan ideas into the mainstream: the BBC uses pagan spirituality as a source of inspiration even for children's shows such as Raven and Merlin, or Saturday tea-time blockbusters Robin Hood and Doctor Who.

It is in pop culture that witchcraft meets the other main force behind the rise in paganism: environmentalism. James Lovelock made the link explicit in his influential 1979 description of the earth as a single, living organism, which he named after the Greek goddess Gaia. Some take this more theologically than others, but it remains the most famous example of how the desire for alternative lifestyles that began to flourish in the 60s has led to both a questioning of our attitude to the natural environment and a turning away from the established, patriarchal faiths towards new forms of spirituality. Of course, you don't have to be a pagan to be a green. Far from it. But the two movements have given each other energy, as each has grown.

For many pagans, becoming a green campaigner is a way of demonstrating faith with practical action. For many activists who come at it from the opposite direction, the pagan idea of an ancient and universal spirit that animates the earth gives their actions a personal, spiritual framework. Not that you have to read eco-theory to get it these days, just watch Teletubbies. "The indoctrination into things like recycling starts at an early age," says Catherine Hosen, a druid from Kent who watches a lot of CBeebies with her children. "If you start off trying to be environmentally aware, it is not much of a step to seeing all of nature as sacred, and from there to becoming a pagan."

Perhaps. This, don't forget, is mostly a loose faith. That is why it is so popular in these individualistic, iconoclastic times. Wander towards the centre of Hutton's concentric circles where the covens wait and you will be asked to pass tests, obey priests, follow rituals and keep secrets; but on the outer edges, at festival times such as the summer solstice, there is none of that - just a dance, a beer and a "Merry meet, merry part and merry meet again". Just watch yourself with those knives.