Friendly folk working on restoring Bob's basement

The New Basement Tapes featuring Marcus Mumford, Elvis Costello T-Bone Burnett recording Bob Dylan songs.

T Bone Burnett tells Neil McCormick how he persuaded today's stars to record unreleased songs by Bob Dylan.

The Basement Tapes is one of the most mythical treasure troves of popular music. Now we have two new versions to contemplate.

From June 1966 to October 1967, recuperating from a motorcycle accident in the aftermath of his rise to global super stardom, Bob Dylan hid away from the world in Woodstock, upstate New York, writing and recording. The demos he made with friends in The Band at the basement of their house, the Big Pink, were never intended for release. Widely bootlegged, they eventually emerged in 1975 as a strange and magical 24-track double album, The Basement Tapes. But these only represented the tip of a creative iceberg.

Columbia has now released a six-CD set of all Dylan's basement recordings. It runs to 138 tracks, with previously unknown Dylan originals among alternate takes, and snatches of folk and country covers. And it turns out there's even more.

Last year, revered Americana producer T Bone Burnett was contacted by Dylan's publisher with a gift. "It was a little file box, about three inches high. There were probably 60 sheets of paper in there. I don't think they'd been looked at since 1967. They had just been put in a box and forgotten." The handwritten pages contained unused Dylan lyrics from the basement sessions. Burnett was given a free hand with them.

"Implicit in Bob entrusting those to me was the idea that we would continue in the same vein he has been digging in all these years. He's a freelance poet, he's a jazz-age artist. Bob grows out of the post-World War II avant-garde of the 40s, the Beat Generation.

"So I wanted to proceed in that Beat spirit, which was improvisational, not concerned with eternity. Very collaborative, working very quickly. We weren't trying to make anything perfect."

Burnett assembled some of his favourite songwriters in the basement of the Capitol studio in LA to record a belated sequel. The band includes Elvis Costello, Marcus Mumford (of Mumford & Sons), Jim James (My Morning Jacket), Rhiannon Giddens (Carolina Chocolate Drops) and Taylor Goldsmith (Dawes). "None of us felt we were dealing with something sacrosanct," says Costello. "There's a sense of playfulness in the folio. They range from the completely barmy to wonderful, beautiful, well-constructed lyrics that are right there waiting to be sung.

"We were walking in, all this time later, to find ideas in a box and turn them into songs."

Lost on the River: the New Basement is a fantastic, free-flowing, shape-shifting work of Americana. "I think Dylan's offcuts are better than anyone else's prime cuts," says Mumford. "There was enough to write 40 songs, which is extraordinary, because that was like one summer's writing for him. It was a fascinating period of his life. He spent the summer of love holed up in a house while everyone else was down the road at Woodstock dropping acid and taking their clothes off. Reading through the lyrics, I think there's a conflict. He has post-tour blues, where you come off the road and it's a weird adjustment to normal life. He was really relishing it, newly married and enjoying domesticity and rural life. But you can see him battle with it too."

Dylan remains fascinatingly inscrutable to the young English folk-rock star, who performed with him at the 2012 Grammy Awards. "He can be aloof, because he's Bob Dylan, but it's like a switch, and suddenly he's the most engaged, intelligent, articulate person in the world.

He thought some of these lyrics may have been too personal for Dylan to record at the time. Burnett interprets the breezy Nothing To It as a declaration of Dylan's intimations of his own genius. The bittersweet Kansas City, he felt, was a riposte to old associates. "In 1967 he had gone, in five years, from being an obscure folk singer to an international rock'n'roll icon of the highest magnitude. And, in the process his original supporters turned on him and it seems like he's saying: 'Just how long can I keep singing the same old song?' There's a great line: 'You invite me into your house / then you say you got to pay for what you break.' I think that resonated very strongly with Marcus, because he has had a similar trajectory. He came out of the box very strong, became internationally successful and suffered an extreme backlash. Kansas City is his song as well."

For Costello, Dylan's manuscripts proved the key to the writing process. "We were originally handed a sheet of typescripts and transcriptions. And actually, when it came to making an emotional connection with something written so long ago, the final piece of the puzzle was to see the handwritten originals. Because then you see the rhythm, you see choices being made on the fly because there are crossed-out words. You could see where thoughts were joined together, where the emphasis was placed a bit more."

Costello suggests a degree of irreverence was essential. "You can't worry that you are tampering with a classic canon. Those big headlines are a little bit like tombstones, they're epitaphs for the arts of songwriting. As far as I know Bob Dylan is a living artist, writing new songs and redefining old ones. It runs counter to the idea of making a definitive statement because it's actually moving all the time.

"If Bob Dylan is a benchmark, what happens if we saw the legs off the bench? What does it become then? Is it just a lower benchmark? Or is there a higher one? To me, this is just some words and music that I care about."

What: Lost on the River: The New Basement Tapes featuring Elvis Costello, Marcus Mumford and more.
When: Released on November 17