Insiders at Cinecitt, the citadel of Italian film-making nine kilometres south of Rome, say they see what is going on there now as an astonishing Renaissance within walls that only recently were showing signs of cracking.

"All of a sudden, so many creative people with ideas have come together here to produce something excitingly new," explained Carole Andr-Smith, a member on the board of Cinecitt Studios and in charge of international marketing. "Thats what we mean by Renaissance."

The rebirth is the child of a major technical revolution, the bomb that started it off being Cinecitt digital, a new division now symbolically at the centre of Cinecitt, a showpiece of clever tricks, a mysterious cauldron bubbling with impenetrable digital alchemy. There, image manipulation now takes place, not to mention colour correction, animation and floor effects. The aim is to offer film-makers, during the very process of creation, a way of simultaneously marrying celluloid and technical wizardry into a seamless symbiosis. A further new facility is now equipped to accommodate the latest film-processing systems, post-production sync and dubbing, while another newcomer laboratory specialises in the frame-by-frame restoration of film classics.

Such innovations are backed up at Cinecitt by 22 sound stages, a huge, wild back lot (at Vicarello on the shores of Lake Bracciano), 40 editing suites, 280 dressing rooms, 21 make-up saloons and 82 prop storerooms.

As a result, it is claimed, Cinecitt is today the biggest and most comprehensive film-making facility in Europe.

"I had lunch with an American director today," related Andr-Smith, a French-American born in Paris. "He said: What I like about the new Cinecitt is that I can walk in with a script and walk out with a completed film.

"In other words," she explained, "were now a full-service complex where every single part of a film can be done. And this is just the beginning. We aim to become the European hub for film production, a base that film-makers from anywhere can branch out from to shoot and return to for finishing off."

Lamberto Mancini, Cinecitts director general, bore her out. "American companies used to buy into just set construction and stages and then go home. Now theyre staying here for the rest."

The upshot is that the number of films produced by foreigners in Rome has doubled abruptly.

This is the result of what Mancini called "massive investment" in modernisation over the past two years, a consequence itself of the privatisation of Cinecitt in 1997, with the state now holding only 25 per cent of the shares, and the rest in private hands.

It began to pay off in 2000 when Martin Scorsese spent six months at Cinecitt making "The Gangs of New York". It was the biggest shoot at the studios since "Ben Hur", the epic patent of the days of "Hollywood on the Tiber" way back in the 1960s, of which todays Renaissance is seen as the long overdue sequel.

Sets from "The Gangs of New York" were still there, marooned (in rain-sodden April) amid an ankle-deep quagmire of mud and puddles run-down wharves and timbered warehouses from the New York of 1830; written upon the grimy walls: "Pier 12 - Accepts Freight - Swiftsure Express-line", "New York Gas Works" and "Ferry from Roosevelt SNY". Also lying around, tickled by drizzle, was a life-size mould of Michelangelos "David" from some forgotten reel and the airborne Christ which was dangled from a chopper during the opening scene of Fellinis "La Dolce Vita".

Mel Gibson then followed Scorsese, shooting sequences of "The Passion of the Christ". Then the BBC, in a co-production with the American HBO, was working on the first episodes of "Rome", a history serial due to run initially for 18 months and for five years if it is a success. In July, heart-throb George Clooney and director Steven Soderbergh are due at the studios to start shooting "Oceans 12", a follow-up of "Oceans 11", set in a Las Vegas casino.

"At any one time," continued Andr-Smith, "were dealing with 60 to 65 productions." The figures include not only films being shot or undergoing post-production work, but television fiction, commercials and shorts, with television and film output about evenly balanced. Surprisingly, all the novelty has not yet squeezed out Italian films, with four or five emerging each year, about the former average. However, in terms of returns, they are astronomically outstripped by the American product.

It is all a far cry from the state-run doldrums of only a decade ago, when the glorious days of the past were a mere memory. In fact, since Cinecitt was inaugurated in 1937 in the presence of Mussolini, it has turned out more than 3,000 films, with 47 Oscar-winners among them.

Cinecitts main competitors in Europe are Pinewood and Shepperton studios in Britain. "But I dont think they yet have the whole production cycle on offer, and costs here are about 30 per cent lower than in Britain, which is already cheaper than Hollywood," Andr-Smith pointed out.

"In fact, I think we have the best mix between quality and price. They can produce better quality than us elsewhere, but its far dearer, and elsewhere again, they can undercut us in price, but you dont get the quality."

Now Cinecitt is expanding physically too. It is about to acquire the old Dino de Laurentiis studios in Rome and studios owned by the comic Roberto Benigni and partner at Terni in Umbria.

One high-up official at Cinecitt remarked: "All we need now is a desert and a cheap labour force."

He was not joking. Cinecitt will soon have both, when deals come off to set up permanently in Morocco.