It took a while for Damien Dempsey to realise what was wrong. On the face of it, he had little to complain about. The Dubliner had previously met formidable obstacles in the pursuit of his musical ambitions, but had overcome industry indifference, critical scorn and public disinterest to become one of Ireland’s best-known singer-songwriters. Now Dempsey was a platinum-selling star, feted in equal measure by ordinary fans and celebrity admirers such as Morrissey and Christy Moore.

But he gradually realised he was facing an unforeseen problem. He was, he realised, too popular. Dempsey, the quintessential home-town hero, knew there was only one solution to his dilemma.

“I wasn’t getting much done here,” he says. “I was going on sessions, gargling. Now that I’m getting a bit of fame in this country, I seem to have a lot more friends than I used to, everybody wants to have a pint with you. So I just needed to get out of Dublin, go somewhere nobody knew me and get some work done. Because after the weekend, I’d lose a few days. I need to get a good night’s sleep, and not be drinking the night before, to feel like writing. That’s when I do my best stuff.

“So for the past year I’ve had a flat in west Kilburn. It’s a bit of a rough-neck area of London: there’s a lot of crack around there. I’m just living in a little damp room, with the neighbours screaming and fighting. I don’t know many people, but I think that’s good. You have to get out of your comfort zone.”

There may be an element of self-conscious proletarian pride in Dempsey’s decision to leave the home comforts of Dublin and live in such a spartan environment, but equally it underlines the personal drive of the 30-year-old singer. As he releases his new album, Live at the Olympia, Dempsey clearly aspires to being more than a big fish in a small pond.

One only has to listen to the rapturous reception afforded him on the new live album, recorded in Dublin last December, to realise how easily he could settle into a comfortable rut, in the manner of other local working-class heroes such as Aslan. As Dempsey belts out his urban ballads in his resonant Dublin burr, the audience sings along enthusiastically, highlighting the anthemic qualities of the songs and dispelling the clunky didacticism that can overwhelm his work.

Dempsey may have moved to London to prepare for the next phase of his career — “Anything I get, I invest straight back into trying to break into other territories,” he says — but as the live recording makes clear, there remains a strong bond between him and his Dublin audience.

The irony is the new disc has the potential to win Dempsey a whole new following. Though the album was “a spur-of-the-moment thing” (his manager, Dave Jaymes, only decided to record the concert the night before), it is Dempsey’s strongest release to date.

“People always said to me, you’re better live, when is the live album coming? Before, I didn’t think we had enough material, but when I listened to the tapes, I thought there’s a good vibe off that, so let’s just throw it out there.

“But anyone I ever liked did that. You hear Bob Marley; his live album is better than a lot of his studio stuff, and the same with Thin Lizzy. You can’t beat the sound of a live gig when a group are giving their heart and soul. You can close your eyes and you could nearly be in the room.”

The palpable affection with which Dempsey recalls such albums underlines his enduring passion for music. It has not always manifested itself successfully, much less subtly, but his progress thus far is testament to the strength of his ardour. Not that a career in music seemed inevitable to the teenage Dempsey as he grew up in the north Dublin neighbourhood of Donaghmede and attended the non-denominational, but largely affluent, school of Mount Temple.

“I think I led a few lifestyles. I’d run wild or go down to the boxing, and then the next thing I’d go home and be the sensitive artist plucking away in the bedroom. So there were two sides to me; I think I wanted the best of both worlds. I didn’t know which one I’d fit into, the tough guys or the more sensitive, cool middle-class kids.”

In the end, Dempsey’s sensitive side seemed to win. Having started to write songs when he was 15, on leaving school he decided to pursue a career in music via the “rock school” at Ballyfermot senior college. But early on, Dempsey’s songs also started to draw on his “hard edge”. In contrast to introspective Irish troubadours such as Paddy Casey and Mundy, Dempsey preferred grittily realistic portraits of urban life.