"Did you know," he asks no one in particular, "than women outnumber men six-to-one in Nottingham? You should see the foocking croompet we get in this place!"

This is the wild and tasteless world of The Hitman And Her, the vibrantly garish, unashamedly downmarket youth TV programme that is storming up the ratings chart with its gloriously OTT presentation of provincial club culture.

The success of The Hitman And Her has been extraordinary. Launched in September with no publicity, one of the worst time slots imaginable - one or four o'clock on a Sunday morning (depending on which TV region you're in) - and what looks like the lowest budget in TV, it nevertheless achieved a ratings increase from 300,000 to 1.6 million in its first four months and, according to Granada TV insiders, it's guaranteed to run "almost indefinitely".

Considering the way TV screens have been awash with wristfully trendy youth programmes, the popularity of such a brazenly tacky show isn't surprising. The director, ex-Etonian Ludo Graham, says The Hitman is "completely opposite to Def II. It's about real people."

But the show's triumph has been its appeal not just to the unaddressed, naff masses, but also to a fashionable audience of discerning clubbers who never set foot in the kind of clubs the programme broadcast from, and to the extremist yuppie subgroup that reads both the Sunday Times and the Sunday Sport. They may watch it knowingly as a piece of kitsch, but the point is that they are watching it.

"People tell me they hate it but it's compulsive viewing," says Pete Waterman, the man U who conceived the show. "And that's almost the way I planned it. If I get home at 12.30 I probably won't want to go down a club, but I'II pull a beerout of the fridge, sit down and have a laugh at everybody else making pillocks of themselves, including the prat who calls himself the Hitman. We tried to play down the tackiness, but it didn't work. The more obnoxious I am, the more people enjoy the joke."

Waterman was a Mecca DJ for 16 years he worked the Leeds Locarno with Jimmy Savile in 1965 - and The Hitman And Her is broadcast from a variety of Mecca venues such as Mr Smith's in Warrington and Sheffield, the Blackpool Palace, the Ritzy in Nottingham and the Leeds Locarno with a band doing a PA, a few videos and a lot of dancing.

Pete introduces the records, rants about major record companies and provides a sarcastic, leering commentary of the night's events, while co-presenter Michaela Strachan whips the crowd up with her boundless high spirits and comperes the competitions "Pass The Mic" (an insult to Karaoke, where punters sing along to classic hits until the crowd can stand no more, and shout "Pass The Mic!"), "Showing Out" (a feast of ludicrous dancing) and the odd fashion show.

The graphics wouldn't look out of place on Play School, with the surreal instruction to "Keep On Dancing!" (in lurid bouncing multicoloured letters) at the fade-out before each ad break. Sadly, there turns out to be a sound explanation for this instruction - it's aimed at the club audience, who watch the show as it happens on banks of TV monitors.

The club night is very much part of "talking DJ" dance culture, with Pete winding the audience up, making dedications over the PA "Be'ave! 'Ere, Michaela! Are those lodges deaf?" and observations that would make all but the most committed sexist cringe - "Hello! She's almost wearing a dress': "Go on kid! Give it some of that': or "We've got Sabrina on next week's show, and you don't get many of them to the pound, eh boys?" And the Hitman's catchphrase, "BE 'AVE!"

The atmosphere in the club is light and friendly, but the relish with which Pete and Michaela rib their often truly appalling competition entrants suggests that public humiliation is a mainstay of the programme. "Absolutely," Pete agrees. "But the public want that. We get people on the programme singing and dancing so badly it's painful, but they come back the next week and tell us that everyone's stopping them in the streets ... to congratulate them, not slag them off.

In January The Hitman attempted to improve its network cred with a broadcast from the Hacienda in Manchester. The show was a flop. The plan was for Pete and Michaela to film a normal Hacienda night fly-on-the-wall-style, with local hero Mike Pickering as the DJ. The shoot was supposed to be a secret, but word got out and Hitman regulars travelled down to Manchester. Two thousand couldn't get into the club, and tension mounted between trendy regulars (locked out of their own club) and the Hitman's handbag brigade (shut out of their programme). Police and ambulances turned up to see what was going on, but six bouncers couldn"t prevent the metal entrance shutters from being wrecked, while inside Michaela was getting a barrage of abuse. Afterwards viewers sent a deluge of complaints about how boring the show was and asking them never to return to the Hacienda.

The programme's late time slot permits not only the good-natured lairiness, but also a fairly progressive play list policy, in many ways the opposite of Top Of The Pops in its championing of the unreleased and overlooked. Hits are broken on the show and bands that haven't yet got a record deal are often booked to appear. As a result of heavy plugging on The Hitman And Her, Virgin gave Sandra's Everlasting Love a UK release, but as soon as it went top 40 the programme dropped it, claiming it was not about pop hits.

Nowadays The Hitman And Her is filmed "as live", which means there's all the panic and concentration of a live show, but they don't actually broadcast it until the following week, as a safeguard against major disasters. The first three shows last September really were filmed live, and the temperature in the first club reached 152 degreesF, scrambling the digital equipment's programming, so that Mart Bianco found themselves miming to a completely different tune.

"We were riding on the seat of our pants," Pete remembers. "Anybody could've gone outside and pulled a plug out of the wall and the show wduld've been off the air. A lot of people probably wish they had."

Around 5pm Michaela arrives at The Ritzy by car from London. She'd set off at 2pm from TV-am, where she'd been working since 8am on The Wide Awake Club. It'll be after 2am before she bunks down in The Hitman coach on the way back to London.

Pete arrives, and half-an-hour later the equipment's ready for a quick rehearsal. The two presenters run through the sequence of events and camera angles, practising a few boisterous announcements and listening to snatches of some of the show's records.

He is down-to-earth and approachable constantly entertaining the crew. His perception of the show is astute and, in contrast to some of his public pronouncements on the music business, refreshingly unassuming. He couldn't care less that very few viewers take his programme seriously, regaling us with tales of the terrible people they've featured.

"Once we had this dance troupe on called Grand Slam, who appeared in leather G-strings and bras, despite the fact that all four of them were at least two stone overweight. I begged them to cover themselves up, but they wouldn't. When they came out the club went mad, and they honestly believed that the crowd thought they were good."

Katie, the researcher who'll later have to find contestants for all the com petitions, asks Pete about the new game, Kiss, Cuddle And Feel. "The girls should be a real laugh," he advises. "A bit tacky ... but not too pissed."

Pete's talk drifts towards dance music, an obvious passion, and countless interviews where he raged against people who view pop music as an art form.

"Music isn't art," he says. "it's for enjoyment, and anyone who says it's art is in the wrong business. Music has always been written for a purpose, be it a wedding, a funeral or a birth, and people have always been paid for it. Mozart, Beethoven and Handel all got paid."

Is a Van Gogh painting not art because it fetches millions at Sotheby's?

"Van Gogh died penniless because nobody bought his paintings - they didn'tthink he was very good at the time. I've been very poor, I've cleaned toilets for Mecca, I've slept on Euston station, and I never want to be like that again. I don't want to go down in history as a great songwriter because I died penniless. I'd rather be remembered as a capitalist who left his children something."

Pete's theory that pop music is just three minutes of disposable plastic makes a refreshing change from the self-inflated rubbish so many musicians are wont to spout, but isn't his view of music as a commercial product utterly cynical?

"Why? If you can use your talents not to stay poor, you should. Ten City have had three massive club hits without selling any records, and now they've got a chart hit. Do you say they've sold out and stop playing them? No, you say thank God they've finally got the hit they deserve."

Pete Waterman's refusal to suppress his opinions has on occasion exposed him to ridicule - as in the sampling storm - but on the whole he appears confidentand competent, clear about what he wants.

"I think people find me obnoxious because I won't admit that I secretly loathe Kylie Minogue and Jason Donovan, but I really do think they're great artists - if I didn't I'd be the biggest hypocrite in the world. I'm only in this business for my own enjoyment, yet because we've been successful and made a lot of .money people automatically assume I'm a raving Conservative and resent my criticisms.

"I wish someone else would take on the major record companies, but nobody does, them stifle British music. I don't mean that in a nationalistic way. In that Mel and Kim song we wrote "We're a dancing nation", and that's what the British are.

"British pop evolved from R&B dance culture, but while the working classes were coming home from the factory and putting on some Motown, the peoplewho now run record companies were at university listening to Genesis or Peter Frampton or whatever their only contact with pop culture was Gary Glitter or Sweet. 1 wish PWL had far more competition, but when it comes to pop music the major labels just don't understand it."

Pete reputedly gets paid £500 for his work on The Hitman And Her, and he claims he loses money on the programme. An odd job for a money-conscious millionaire?

"I do this for selfish reasons. Firstly because I hate not working and I haven't worked as a club DJ for eight years, so this was a way back in. Secondly, it's very important for me, as the head of a record company, to research what's going down well on the dancefloor."

Pete Waterman is larger than life. As a child he was a train spotter; now he owns a class 25 diesel that is active on a line not far from his home in Merseyside. He claims he learnt to read only six years ago. He also collects Ferraris, breeds rainbow carp in a pond behind his house, and has a fish farm in Japan.

"Rick Astley introduced me to these giant goldfish and I've become totally hooked. Ten years from now I'm gonna be 52, and I'm not going to be able to go down the Hacienda without looking a complete prat. I'd like to be able to spend some time in Japan, which I find very beautiful and relaxing."

Back at the Ritzy queues are forming around the block, and one of the production team has spotted a pair of diehard Hitman fans in the queue. Franky and Mark are from Banks near Southport. They first went to The Hitman in Blackpool after seeing one on TV, and have since been to at least 10 of the shows. Nowadays they get in free and are given VIP passes (access to all areas), but tonight the five mates with whom they've driven 150 miles from Southport have all been refused entry by the Ritzy's management for being under 20.

Franky is a DJ himself and a fan of Pete's Hitman radio show - the biggest programme on Liverpool's Radio City - and Mark just enjoys the clubbing event that is The Hitman And Her. "I like the laugh that everyone's having. We've danced on stage with Pete and Michaela and we got to meet Aswad.

The Ritzy fills up in a flash, and Katie the researcher has soon found all the contestants for tonight's show. "These people are willing to do it at the beginning of the night when they're sober," she says. "What worries me is what they'll get up to by the time we get to the competitions, and they're a bit bevvied."

Michaela has been given a minder since the Hacienda. "Some clubs are okay for walk abouts, but others aren't," she says. "Most of the guys are quite tiddled, and when you're on the screen all they want is to get their hands in your knickers and pinch your bum. I get really fed up with it, so now I've insisted on having a bodyguard with me."

Showing Out and Pass The Mic yield some surprisingly good dancers and singers, but the choice of Pass The Mic winner suggests that breast size is the judges' main criterion. "Are they deaf?" screams Pete, throwing the crowd an incredulous look. One girl stood out as by far the best singer. The best-endowed girl won.

As the audience are too preoccupied to buy any drinks, the barman and five barmaids dance on the barthroughout. When it's all over, around 2am, the crew celebrate with a drink or five upstairs, and Michaela tells us she's just signed a record deal with London Records. Her singing voice is far more impressive than her talking voice (she's been to musical theatre college), and the songs will be pure pop "Let's be honest, that's my audience, " she says. "I won't be working with Pete. I've recorded a lot of stuff with songwriters whose work I like, but I'II probably do a cover version as my first single because, as a TV presenter, I'm bound to get a lot of flak at first."

After being involved with The Hitman, a show that celebrates its own lightweight tackiness, establishing her credibility as an artist could be a problem.

"Not at all! I don't have any pretensions, and I get really sick of artists who're so flippin' trendy that they don't have fun.

Pete Waterman is making animated con versation at the bar. After trying unsuccess fully to blackmail him with photographs of his dancing, we part company, wondering aloud if he would tart the programme up were Granada to come up with the big bucks.

"No!" he insists, "I'd leave. We're already so far ahead of our expected ratings that they keep suggesting we move it to an earlier time, but I won't let them. It can't become a pop show, it has to stay the way it is. People come home and switch on the telly, then they either hate it and switch off again, or they think, 'It's that bad, I'II watch it'."