In the past few years, adaptations of classic plays have become more the norm than otherwise in Australian innovative theatre. Two directors in particular wrenched opened the Pandora's box. Barrie Kosky led the way from the 1990s with refigured classics, such as Lear or the baroque opera Poppea, while Benedict Andrews's explored an austere theatricality in shows such as The War of the Roses. And there's Simon Stone's adaptations, from Hayloft's visually luscious Chekhov Recut: Platonov to the controversial Malthouse/STC production Baal to his sensitive reworking of Ibsen's The Wild Duck.

All these directors demonstrate the far-reaching influence of European auteur theatre on Australian work. Kosky and Andrews work as much in Europe as they do in Australia (Kosky, now the director of Berlin's Komische Oper, seems to have vanished from the local scene almost completely). Then there's Daniel Schlusser, who has been working rather more under the radar and whose work has been leading him in a strikingly different direction. Over the past few years he's been conducting a fascinating exploration of theatricality, mainly in the institutional shelter of the VCA, that has produced some of the most exciting work that Melbourne has seen in the past few years.

I wouldn't say Schlusser adapts classics so much as blows them up: this work is much more than rewriting. Using a practice he calls "hyper-realism", he makes theatre out of classic texts that is not so much a textual exploration as a haunting, a demonstration of how these works live in our collective unconscious. With his collaborators, he creates an alternative theatrical reality that is at once located firmly in the present and the past. The first I saw of these works was A Dollhouse, an investigation of Henrik Ibsen's A Doll's House at the VCA. The Dollhouse at Fortyfive Downstairs is a revisiting of this production with a (mostly) new cast, and it demonstrates how polished Schlusser's practice has become.

Watching it, I was forcibly reminded of a show I saw in Britain back in 2008: Chris Goode's brilliant ...Sisters, a deconstruction of Chekhov's Three Sisters by way of John Cage. The reason is the profound focus in both directors on the theatrical present. No matter how we imaginatively enter the realities on stage, we are always reminded that this is a work of theatre, an artifice. This is a characteristic of most work in this vein, but Goode and Schlusser in their different ways explore further the implications of what this means for performance. Crucially, both have an unerring, even poetic, sense of theatrical rhythm that makes their investment in the minutiae of human experience deeply riveting.

As with ...Sisters, the audience enters to find the actors already on stage, in pre-performance mode, getting dressed, flirting, having barely audible conversations, fiddling with props. The play itself is introduced by Schlusser (who plays Krogstad) reading Ibsen's stage directions through a microphone, but its action evolves organically from the the idle conversations and games of the actors. The delicacy of this transition is hard to overstate: the actors remain the actors, while slipping almost subliminally into their assigned roles. These performances remain unstable, since the actors might at any point slip back to being "the actors" (roles which are, for all their apparent unstudiedness, as much a performance as the roles in the play).

Complex as this might be to describe, in performance it is very lucid. And we get Ibsen's play, although this time much more radically translated than in the 2007 show. What's followed is the action, not the text. Nora (a transcendentally good Nikki Shiels) is a sexy young thing addicted to shopping, living in the gilded cage provided by Torvald (Kade Greenland), who works for the Macquarie Bank. Nora's friend Kristine (Edwina Wren) is an unemployed economist from Tasmania, and is, aside from the faithful Dr Rank (played with poignancy by Josh Price), her only confidant.

She is as imprisoned in deceit as Ibsen's Nora, but Torvald's tyranny is more subtle, a question of invisible strings. It plays out in the sexual manipulations she uses to attract Torvald's and attention and favour, her willingness to be a sex toy, her terror that Torvald will discover that she has fraudulently borrowed money from Krogstad (Daniel Schlusser). When Nora's lies catch up with her and her world collapses, we get as powerful an image of abjection as I've seen on stage: Nora, stuffing her mouth with marshmallows so they spill out half chewed, her face smeared with tear-smudged make-up, clutching her groin like a little girl who wants to wee, but here with a horrifying sense of sexual injury.

The action plays across a narrow metallic set designed by Jeminah Reidy. It's a house of expensive toys - Torvald's Playstation, litterings of Lego and brightly wrapped Christmas presents - that summons the empty materialism of Torvald and Nora's marriage, the objects and rituals that replace actual relationship. Although Schlusser has kept the rewritten ending, as he did in the first production, he gives us a much tougher interpretation: the actions of these people are more ambiguous and lost, Nora's sexuality more scarred and frightened, the subtext beneath seemingly inconsequential interactions more desolate.

This feels like a work in which every moment has been thought through, creating theatre of admirable emotional and intellectual rigor. Mandatory for anyone interested in the possibilities of the contemporary stage. It's on until Sunday, as part of the Melbourne Fringe.

Picture: Nikki Shiels in The Dollhouse. Photo: Marg Horwell.

The Dollhouse, adapted from the play by Henrik Ibsen, directed by Daniel Schlusser. Set design by Jeminah Reidy, costumes by Tiffany Abbott, lighting by Kimberly Kwa, sound by Martin Kay. With Nikki Shiels, Kade Greenland, Edwina Wren, Josh Price, Daniel Schlusser and Cate Bastian/Gabrielle Abbott. Fortfive Downstairs until September 25.