There are two principal attitudes to Mohammed Mossadegh. The first is that he was the Iranians' last chance of becoming a free and happy people. His overthrow by British and American agents in August 1953 delivered Iran up to the Pahlavi autocracy and then, in 1979, to government by mullah.

The second is that of Harry Truman's secretary of state, Dean Acheson, who described the Iranian prime minister as "essentially a rich, reactionary, feudal-minded Persian inspired by a fanatical hatred of the British and the desire to expel them regardless of the cost".

Christopher de Bellaigue's new life of Mossadegh adopts the first attitude, while showing enough of the second to provide balance and variety. Patriot of Persia seems to me to break new ground in Iranian biography, and is sure to find readers in Iran. To the local tradition of sententious life stories ("Relics of Their Eminences", "Distinguished Men of Isfahan", "Anecdotes of the Scholars"), De Bellaigue adds the domestic and personal detail that is the glory of British biography. Adam Smith once said he was glad to know that Milton tied his shoes with laces not buckles. De Bellaigue is good at laces.

With his bald head and drooping nose, his pyjamas, floods of tears, fainting fits, swoons, imaginary illnesses and iron bedstead, Mossadegh was all his life at the point of death. He lived to 84 and far outlasted his generation. He was the relic of the last truly Iranian age, before that country was forced open to the world in the 1890s. Running through De Bellaigue's book is a homesickness for an Iran he never knew, with its antique manners and delicious food, demolished by the Pahlavis and the revolution of 1979.

Mossadegh was born in Tehran in 1882 to a princely family. His mother was cousin to the Qajar Shah. As a child, he received the title of nobility, mussadiq al-saltaneh, "certifier of the monarchy", which in Europe he shortened to Mossadeq or Mossadegh. A democrat, he was elected to the first Iranian parliament in 1907 but barred on grounds of youth. When in the next year the new parliament was bombarded by the reactionary shah, he set off to join the defence but was frightened by the sound of cannon. In 1909, he travelled to Europe  first Paris and then Neuchâtel  and took a doctorate in law. On his return to Iran, he filled various cabinet posts without great energy or distinction.

In 1925, when a former Cossack who called himself Reza Pahlavi moved to install himself as shah, Mossadegh was one of four men to speak in parliament against the bill. He absented himself for the vote. "A broth is on the stove, and I do not want to be the vegetables," Mossadegh said and retired in 1928 to his estate at Ahmadabad, west of Tehran. In 1940, Reza threw him into jail in the remote desert town of Birjand, where he fully intended to die had not Reza's young son, Mohammed Reza, interceded for him. De Bellaigue's account of Mossadegh's domestic life and tribulations at this period, and the mental illness of his daughter, is beautifully done.

In 1941, Britain and the Soviet Union invaded Iran and Reza abdicated in favour of his son. In a sort of interregnum, Mossadegh became the champion of a movement to nationalise the oil industry developed by the British in the south-east of the country.

For 30 years, the British oil company had used revenues from Iran to create the international giant now known as BP, financed the British effort in two wars and left only scraps to the Iranian treasury. In 1951, Iranian oil was nationalised and Mossadegh became prime minister. The major oil companies refused to lift Iranian oil and the country's revenue evaporated. Unable to control a faction-ridden parliament, or turmoil on the streets fuelled by communists, clergy and the terrorists of the Warriors of Islam, Mossadegh rejected every compromise. He exhausted the patience of the Truman administration while its successor under Eisenhower fell prey to British whispers that Iran was falling to the Soviets. He demanded dictatorial powers.

A coup d'état on 15 August 1953, backed by US and British agents, was a fiasco, but four days later, while Mossadegh dithered and dozed, royalist soldiers and bazaar toughs overran midtown Tehran, the radio station and his house at 109 Palace Street. De Bellaigue's picture of Mossadegh on his Russian army bedstead while the room shakes under fire from the royalist Shermans is unforgettable. His version of events is better than recent scholarship in the US, which exaggerates the role of American agents and American money, and in the Islamic republic, which did likewise. The book's subtitle ("a very British coup") does not fit the text.

Mossadegh was put on trial  which gives De Bellaigue another set-piece  imprisoned for three years and then rusticated to Ahmadabad, where he died in 1967. There was no official mourning in Pahlavi Iran and Khomeini, who hated him, refused to hold a memorial service.

De Bellaigue writes with a certain hauteur. It is not the British hauteur of Curzon or Churchill, but of the Qajar noblemen who are the principal sources of the book. As is the way of human nature, those old men in Geneva and Paris reserve their venom not for the British or Americans but for the Pahlavis.

Thus Mossadegh, who achieved nothing lasting in his life, is praised to the heavens. Mohammed Reza, who brought to Iran a prosperity, security and prestige unknown since the 17th century, is a "marionette of Washington and London" and a "vulgar dictator".

Though De Bellaigue does not say this, Mossadegh's old colleagues and adherents submitted to Khomeini in November 1978 and thus abandoned what the Pahlavis had left of constitutional government and liberty. They were imprisoned and butchered for their pains.

The wind changed and lachrymose intransigence became the permanent face of Iran. During the American hostage crisis of 1979-80, and the 1980-88 war with Iraq, the revolutionaries spurned countless opportunities to settle with honour and profit. Like Mossadegh, they ended with absolutely nothing at all. God forbid that the same should occur with Iran's nuclear projects.

 James Buchan's Adam Smith and the Pursuit of Perfect Liberty is published by Profile.

Iran is the only country in the world where people think that secretly, behind the charade, America is Britain's poodle. The eponymous hero of the 1970s comic novel My Uncle Napoleon  which was turned into one of the most popular TV series ever shown on Iranian television  is affectionately parodied for this: whatever went wrong, Uncle Napoleon blamed the British. The reason lies in a historical period imprinted on the minds of generations of Iranians but long forgotten in the UK. Christopher de Bellaigue's elegantly written account of the life of the nationalist Prime Minister Muhammad Mossadegh, and the MI6/ CIA-led coup against him, not only tells the full story of what happened, but highlights the dangers of a foreign policy that ignores the perceptions of those with memories longer than our own.

There have been several previous biographies of Mossadegh, but De Bellaigue  a Persian-speaking British journalist who lived in Iran and married an Iranian  has written a book that feels both fresh and relevant, and has a foot in both the British and Iranian camps. Muhammad Mossadegh was a Persian nobleman, born towards the end of the 19th century, who, as prime minister of Iran in the early 1950s, nationalised the country's oil. This brought him into conflict with the British government, led by Winston Churchill, which, just before the outbreak of the first world war, had bought a majority stake in the Anglo-Persian Oil Company, with its concession in Iran. Churchill thought that if Mossadegh's move was allowed to set a precedent, British imperial power would be under threat across the globe. At first the Americans were neutral, even inclining towards Mossadegh, but  in the Iranian version of events  the perfidious British persuaded them otherwise. Dwight Eisenhower, elected in 1953, feared that Mossadegh's liberalism would lead to communism. The coup involved the dark arts in which the British and American secret services excelled: disinformation, unleashing agents provocateurs, paying thugs and politicians and forging documents. The tragedy is that it worked. The most enlightened Middle Eastern government of the age was overthrown, ushering in first the dictatorial regime of the Shah and then Ayatollah Khomeini's Islamic Revolution.

De Bellaigue sees racism in the British attitude to the man Churchill nicknamed "Mussy Duck". Statesmen like Thomas Babington Macaulay saw "a single shelf of a good European library" as superior to "the whole native literature of India and Arabia". Such an attitude did not go down well in the land of the poets Rumi and Hafez, which had an empire when Britain was still inhabited by iron age tribes. Every now and then, an orientalist diplomat would reveal a romantic enthusiasm for things Persian, but De Bellaigue believes that "a profound contempt for Persia and its people" lay at the heart of British policy.

Yet he is not blind to the faults of his subject, whom he describes as "a peculiar man", a "mixture of visionary and fusspot" and a "shameless hypochondriac" who "fainted and howled in public". De Bellaigue writes with humour and attention to revealing detail, painting a picture of Mossadegh as a man of principle, who acted out of patriotism and a sense of justice, but who rarely hesitated to take to his bed with a fit of the vapours if he thought it politically expedient, and who, by the end of his time in office, acted against his own democratic values. He missed opportunities to compromise with the hated British which would not only have benefited Iran, but might have prolonged his government. Mossadegh failed in part because of his own complex, flawed character, and in part because he was ahead of history. Anglo-Persian went on to become British Petroleum. Twenty years later, when Middle Eastern oil producers, spearheaded by Colonel Gaddafi, nationalised oil assets and withheld supply to push up the oil price, BP might have recollected Mossadegh's terms with nostalgia.

For Iranians, Mossadegh's legacy is a pride in Iranian-ness which the current regime's trumpeting of Islamic over national identity cannot extinguish. Similarly, his treatment by the British has come to symbolise the effrontery of meddling foreign powers. De Bellaigue is careful not to make crass comparisons, but this is nonetheless a timely book. Whenever a British or American politician chastises President Ahmadinejad for his nuclear programme, and talks of "carrot and stick", even Iranians who loathe the current government, and disagree with its nuclear policy, recall Mossadegh and Churchill. It raises a disturbing question: will our current objection to Iran having a nuclear weapon one day look like Britain's 1950s horror at the idea that Iranian oil might belong to the Iranians and not to us? There are many reasons why not  but if you don't ask the question, you cannot understand the current Iranian government's negotiating strategy and rhetoric.

Lindsey Hilsum is international editor for Channel 4 News. Her book Sandstorm: Libya in the Time of Revolution will be published by Faber on 5 April