It's the lot of most children to see more than the adults in their lives but to struggle with how to decode it: observant, helplessly impressionable and hungry for incident, their interpretations of the environment and occurrences that surround them are hit and miss  sometimes uncannily spot-on and sometimes spectacularly amiss. That inherent unreliability makes fictional children appealing vehicles for dramatic irony, protagonist-witnesses of a story of which they have only a partial understanding, whose gaps in knowledge and comprehension mirror their readers' experience and occasionally leave us terrified in the face of their ignorance. But it's a tricky tightrope to walk: too much savvy tests credibility, too much innocence risks sentimentality.

It's a balancing act that Kelman's novel, published in the wake of much advance praise and its inclusion on two lists of promising debuts (Waterstone's 11 and BBC2's New Novelists: 12 of the Best from the Culture Show, which I helped to select), manages fantastically well, and in such assured fashion that it seems hard to believe this is the author's first book. Filled with energy, humour and compassion, Pigeon English is a gut-wrenchingly sad novel that makes you laugh out loud.

Telling its story is 11-year-old Harrison Opuku, who has recently arrived in London with his mother and his sister, Lydia; his father, grandmother and baby sister remain in Ghana, trying to get together the money to join the rest of the family. Installed on the ninth floor of Copenhagen House, in the midst of a far from salubrious council estate, they get their bearings and begin to settle in.

It's Harri who seems particularly alive to the strangenesses and delights that confront him. He is amused by the language he hears ("In England there's a hell of different words for everything. It's for if you forget one, there's always another one left over. It's very helpful") and thrilled to find a wealth of treats on offer at the local market, especially useful since it's his ambition to try every Haribo sweet in the world. Back at home, he is drawn to the panoramic (if not picturesque) views from his balcony and determined, with the aid of piles of flour and without the knowledge of his mother, to befriend one of the pigeons who uses it as a stopping-off point. His preoccupations  supporting Chelsea, building a rapport with Poppy Morgan, a girl at school, keeping out of the way of his sister and her annoying friends  are entirely predictable, entirely childlike and entirely harmless.

The outside world, though, has other plans. At school, the boys "chook" each other with compasses; "It doesn't really hurt," confides Harri, "it just gives you a crazy surprise. There's never any blood." But outside Chicken Joe's, another boy has been stabbed to death. He was also a Chelsea fan, and once defended Harri from older boys who were laughing at his short trousers; and those minimal encounters, coupled with the sight of the dead boy's mother "guarding the blood", provokes feelings of empathy, dismay and determination in Harrison. With his friend, Dean, an aficionado of CSI, he turns detective, an enterprise dangerously boosted when he sees someone retrieving a knife from beneath some wastebins.

Dean and Harri's sleuthing is comically amateurish; they attempt to collect fingerprints with Sellotape and stake out the Chips n Tings van, with uneventful results: "Unknown white male came, bought a burger, went again. No signs of guilt." But gradually, the involvement of the Dell Farm Crew  X-Fire, Dizzy, Killa, Clipz  becomes apparent, and Harri's inconvenient interest begins to make the reader worry for his safety. The fact that he appears, during the narrative, to have acquired a guardian pigeon  in one of the novel's few false steps, the pigeon sporadically addresses the reader  does little to allay our fears.

It's neither possible nor desirable to write lightly  or light-heartedly  about knife crime, and Pigeon English, for all its humorous touches, doesn't. What it does do is to rid the subject of its portentousness, to root it firmly in a milieu where kindness and catastrophe, laughter and viciousness coexist. It is under no illusions about the effects of external violence on Harri's life; in his school breaktime, he merrily plays a game called suicide bomber, in which "you run at the other person and crash them as hard as you can. If the other person falls over you get a hundred points. If they just move but don't fall over it's ten points. One person is always the lookout because suicide bomber is banned."

It's a world in which conflict and aggression have been normalised; but through the exuberant naivety of Harri's voice, Kelman also insists that those are not its only elements, and not even its most important ones. More important, perhaps, is the pleasure that we get from listening to Harri's voice, to his frequent emphatic exclamations of "Asweh!" and "Advise yourself!", his description of anything especially formidable as "hutious", and his wide-eyed, curious delight in his new and unfamiliar setting. It seems perverse to describe Pigeon English, with its spilled blood and wasted lives, as an optimistic book but, against all the odds, it is.

The story of Stephen Kelman's debut novel Pigeon English is the unlikeliest of fairytales. Not, however, for its protagonist, Harri Opoku, an 11-year-old Ghanaian immigrant caught up in gang warfare on a south London estate, but for its author. After being discovered on a literary agency's slush pile, Kelman's manuscript sparked a bidding war between 12 UK publishers and was finally secured by Bloomsbury in January 2010 for what his agents described as a "high six-figure sum".

Since then, the hype has only intensified. Even before publication, Pigeon English has appeared on best new novel lists from Waterstones to the Guardian, and its (relatively) edgy credentials were cemented when the BBC commissioned an adaptation directed by Adam Smith of the E4 teen drama Skins.

The novel's world of urban grime and casual violence, of course, could not be more distant from such media plaudits. Pigeon English opens as Harri has just moved to the Dell Farm estate with his mother and older sister, Lydia, leaving his father, grandmother and baby sister, Agnes, behind in Ghana. Along with the shock of emigration and the usual preoccupations of growing up  whether lovely blonde Poppy Morgan will sit next to him in art class, whether his Diadora trainers can outrun his classmates' Nike Air Max  he must negotiate tougher problems.

Harri's surroundings bristle with half-understood menace, most obviously from the alcoholics, dealers, petty criminals and teenage members of the Dell Farm Crew gang who shadow the estate. But gradually his sister, aunt and even his mother, forced into moral compromise in her struggle to give her children a better life, are implicated in the violence that pervades estate life.

Pigeon English, which draws heavily on the killing of 10-year-old Damilola Taylor on a Peckham estate in 2000, weaves this suffering into a murder-mystery of sorts. After the seemingly random stabbing of an older boy outside a fried chicken shop, Harri and his friend Dean turn amateur detectives, scrutinising the estate and its dysfunctional inhabitants for clues. "We're looking for the knife the dead boy got killed with," he explains. "It's called the murder weapon." Kelman has already been much praised for his ability to write from an 11-year-old's perspective, but here, as often in the first half of the novel, Harri's voice feels laboured and faux-naïf.

Elsewhere, Kelman blends Ghanaian slang such as "Asweh" ("I swear") and "hutious" ("frightening") with familiar London-ese to fresher and funnier effect. When the boys watch a local dog choke on some lager offered by its alcoholic owner: "Every sneeze made a new sneeze. Even Asbo was surprised. He couldn't stop for donkey hours."

As well as describing the estate's own "pidgin", "Pigeon English" refers to a feral pigeon Harri comes to believe is watching over him. In the novel's weakest passages, Harri's street-smart observations give way to portentous prose in which this pigeon-protector reflects on magpies, poisoned grain and the fleeting nature of human existence: "I owe it to all of you, a cheap act of confederacy against the drip-dripping of ill-captured sand." The attempt to shoehorn yet more significance into a narrative already heavy with "relevance" falls flat.

Metropolitan excitement over Pigeon English is no surprise  the young French-Algerian writer Faïza Guène created a similar stir when she introduced the Paris banlieues and their verlan slang to French literary fiction in her 2004 debut Kiffe Kiffe Demain. Pigeon English (which comes packaged with reading group discussion points such as "Has the novel in any way changed the way you think about youth gangs, knife crime or urban poverty?") does an admirable job of revealing the frightened teenage boys behind gang members' tough façades. But it is too conscious of the gulf between its subjects and its inevitably middle-class readers to be truly convincing.