Five years ago, these collaborative fantasy games - based on text on screen rather than images - were all the rage. Players from round the world logged onto remote computers offering different MUDs and typed up whole worlds together. Some were close to the role-playing fantasy games of Dungeons And Dragons. Others were based on famous works of fantasy fiction — Tolkien or Terry Pratchett, say - and let users improvise and immerse themselves in their favourite worlds. Others, known as TinyMUDs or MOOs (for MUD Object Oriented), were more social.

Players tried to build communities, pondered politics, donned digital drag and generally messed around with their identities and had "Net sex" with each other. And the worlds continued to exist and unfold even when players went offline.

Though they relied on text, MUDs proved to be incredibly immersive, much more so than the virtual reality goggles and gloves also being hyped at the time. Players were sucked into the worlds they helped to write. They spent hours in their favourite MUDs, sparking the first panic about Net addiction. In 1994, according to some surveys, MUDs accounted for 10 per cent of all traffic on the Net.

Then the Web took off, and MUDs drifted off the mainstream cultural radar screen. But though they faded from view, they continued to thrive. "If you log onto the MUD Connector [a Web site that lists active MUDs at mudconnect, you will see a list of well over a thousand MUDs, all of which are up and running right now," says Richard Bartle. It was Bartle who, with Roy Trubshaw, created the first MUD, at the end of the 1970s, when both were students at the University of Essex.

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Pioneers of the MUD worlds ... Roy Trubshaw (left) and Richard Bartle on their old coding campus at Essex University
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Now this rather old fashioned area of the Net is the subject of a new book that feels more cutting edge than any of the recent slew of books on the online business. Julian Dibbell's My Tiny Life (Fourth Estate, £16.99), which documents a spell of intense "MUDding" by the author, is a clever mix of reporting and theory. Dibbell is the writer for The Village Voice, the New York alternative weekly, who wrote the most famous journalistic story about MUDs, A Rape in Cyberspace. The tale described what happened on LambdaMOO, a particularly bohemian MUD, when one player, Mr Bungle, used some sneaky programming to take control of the personae of two other players and "rape" them.

In the process of deciding how to punish Bungle, the LambdaMOO community attained a new kind of political self-consciousness about itself. Dibbell himself became so fascinated by the story that, after it was published, he set up home on LambdaMOO and, for three months in 1994, spent a sizeable chunk of his time logged on.

My Tiny Life relates the experiences he had during that time, using them as the basis for a fascinating and beautifully written investigation of the slippery realities of the "virtual life". While pointing out that the boundaries between the real world and the virtual one are never as clear cut as some would like, Dibbell does a brilliant job of demolishing some well established Net myths. For example, he's particularly good at describing the way Net sex really works, managing to avoid both sensationalism and cheap gags.

Dibbell doesn't spend that much time in LambdaMOO anymore. But what he experienced there continues to inform his writing on technology in general. "Almost every sort of social and technological phenomenon I encountered in there has been reproduced elsewhere on the Net," he says. "Take this tension in the MOO between the communitarian types who wanted every decision to be a matter of consensus and the techno-libertarians who said the way to solve the problem is just to redesign the architecture. That is something that recurs all over the Net, for example with current discussions of how to deal with spam."

Dibbell says he hopes his book shows that there is more to the Net than e-commerce. "This metaphor of the Net as a virtual shopping mall is really crowding out the older one of it being a virtual community. I would love for people to read my book and say, the possibilities for community are so much richer and stranger and livelier than what's being talked about."

According to Dibbell, Pavel Curtis, the programmer from Xerox PARC who originally started up LambdaMOO, did at one point think that MOOs and MUDs might turn into some sort of general interface for a global network. But once the Web took off, he ditched that idea and began to realise that MUDs weren't going to develop into anything else. Rather like books, they were a stable technology, perfect at delivering a particular kind of experience.

However, some people are trying to move the MUD idea forward. Bartle and Trubshaw now run their own company, MUSE, and spend their time coding new MUDs, writing papers on the subject and doing consultancy for other companies in the area. Bartle says that MUDs could be used by the business world as role-playing training environments. He also says, rather cryptically, that MUDs could be a useful tool for social engineering.

However, MUSE's current big project is a pure game, MUD2 - a vast fantasy world that has been running in some form for more than 10 years, and is one of the more popular options on Wireplay, British Telecom's online gaming service. (The game can also be accessed via the Web)

MUDs seem to be behind the service's current stress on "persistent world" games, which use images but continue to exist and unfold even when a player is not online. The old text-based games have been an influence, acknowledges Colin Duffy, who set up Wireplay and now is in charge of BT's mass market Internet services. MUDs embody the "holy grail of online gaming," he says. "They've got a sense of community and intelligent gameplay - because people are playing against other people and not AI routines."

The computer games world in general has long tried to find a way to match the feeling of immersion players get from a good MUD. Some of the big online games - for example, Origin's Ultima Online - seem to owe something to Bartle and Trubshaw's creation. "The lessons learned about virtual communities on the Internet that were learned in MUDs have only just begun to be fully appreciated," says Raph Coster, Ultima Online's designer. "In terms of gaming per se, every single major online persistent world venture has teams that came from MUD backgrounds."

There is a big difference of course between MUDs and Ultima Online. The latter is a graphic MUD. Players log on to a visual world. That can cause problems, says Bartle. "You can't represent anything you can't draw a picture of. In a MUD, I can say, there's a foul smell of decaying flesh emanating from the east. You can't do that in an online 3-D game. There's also no way of building any narrative tension." In a MUD, you can do that by writing ever shorter sentences, he continues. Then when the danger is passed, your prose can get looser and more relaxed. "You can't do that in a game like Ultima because you don't have that kind of access to people's minds. All you're doing is communicating with their eyeballs."

The difficult thing, says Bartle, is overcoming prejudices and getting people to realise how accessible and powerful interactive text can be. With their stress on linguistic ability and communication, MUDs ought to appeal to female players, and yet they have a masculine aura, which puts many women off. Bartle is trying to write a MUD that will draw in women players. It's set on a Caribbean Island, in a hotel that doubles as a kind of Betty Ford clinic for recovering shopaholics...

While he develops what he describes as this "postmodern MUD", Bartle is continuing to add to MUD2, a game which, though well over a decade old, shows no sign of coming to an end. He puts its longevity down to its low-tech nature, something that, he suggests, will ensure MUDs' continuing survival even as flashier parts of the Web crash and burn.

"Part of the reason people are still playing MUDs - and they've been playing them for 10 to 15 years, sometimes the same game, which you can't really say of any other online game - is because they're text. That endures far better than graphics. If I pull a game off my shelf which was made in 1990, it looks so crocky now. But text does last, so long as you've got the imagination."

Jim McClellan wrote the Guardian Guide to the Internet, published this month by 4th Estate at £6.99 and available from all good bookshops or by calling The Guardian Shop on 01483 20 44 55 (p&p free)