ATMOSPHERE IS A crucial ingredient in any book, but especially where children are concerned. That magical feeling, which all good children's fiction conveys, is a gift bestowed (as Enid Blyton's work demonstrates) even on those bereft of style, psychology or plot. When you find it, it's gold dust.

F.E. Higgins proved herself to be a striking new voice with The Black Book of Secrets, one of the best debuts of last year, and its sequel, The Bone Magician, is just as strong. Partially, this is because it is set in a land in which people are utterly miserable. As one character, Deodonatus, observes: “People wanted to be shocked and entertained, and they wanted to know that there were things out there whose existence was just a little bit worse than their own.”

Urbs Umida, the city from which young Ludlow Fitch escaped in The Black Book of Secrets, has its River Foedus dividing the prosperous north side from the dismal south, and has squalor in spades.The author, who presents herself as a kind of explorer uncovering stories of the region, has a wry, sophisticated voice. This contrasts with the naive journal kept by her new hero, Pin, excitable advertisements, and florid journalism written by Deodonatus, a hideous trickster with a sinister second life. If you can imagine Terry Pratchett's Discworld rewritten by a junior James Joyce you might get an impression of the playfulness, drama and disgust of Higgins's created world.

Pin is earning a living watching corpses - no easy task, since when we first meet him he's drugged in an undertaker's basement. A young woman has died, and the Bone Magician, Mr Pantagus, has been paid to raise her from the dead for a few precious moments to allow her fiancé to speak to her. Is the magic real, or trickery? The magicians' pretty young assistant, Juno, isn't telling, but meanwhile the Silver Apple Killer is stalking the stinking streets, picking off victims, and Juno is looking for the man who murdered her father.

The novel will be strong meat for those under 10, though disgusting scenes such as the stomach of a corpse exploding and showering onlookers with “vile putrefying juices” when dragged out of the river are irresistible. It would be good if there were some contrast to it. More challenging are the sophisticated switches between characters, which slow down the plot even as they make readers revel in the baroque black comedy and gorgeous eccentricity of the author's imagination. If your kids love Tim Burton's films, they'll adore this.

Lucy Coats's first novel, Hootcat Hill, offers more conventional and wholesome stuff for under-11s. Like The Bone Magician, it's set in a world that is very nearly this one, but in a country landscape suffused with ancient magic. Linnet, the heroine, discovers she is “the Maiden”, with powers she must use to return the dreadful worldwyrm to sleep if the modern world is not to be destroyed.

Again, what makes this novel special is the fey, fantastical atmosphere it creates. It uses well-worn mythological treasure troves with the same brio that Joanne Harris recently brought to Norse legends, to show how a bullied schoolgirl can find unexpected reserves of courage. Where Higgins's novels will make a child feel tougher and luckier, Coats's will make them dreamier and more hopeful. It's all a question of which atmosphere suits yours best.

The Bone Magician by F. E. Higgins
Macmillan, £8.99

Hootcat Hill by Lucy Coats
Orion, £9.99

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