The director of the most acclaimed British film in Cannes has said Britain should "not copy the American [film-making] template" but rather look to itself for ideas

Terence Davies' Of Time And The City, shown out of competition, has turned out to be one of the highlights of the festival, drawing rave reviews from critics.

The film mixes archive footage of the director's birthplace Liverpool with an atmospheric and inspiring voiceover provided by Davies himself.

Times film critic Wendy Ide called the film "both a celebration and a eulogy for an iconic city".

Speaking at the UK Film Council's office in Cannes, Davies called on British film-makers to look to their own country or city for ideas.

He said: "If we are going to have a national cinema we have got to make stories which arise from our islands.

"What we do most of the time is make sub-American nonsense. The American template is very often lousy - why do we want to imitate it?"

Emphasising the importance of being true to an idea and not compromising, Davies joked: "I know that sounds incredibly pompous, but I don't care."

Of Time And The City is one of three films funded by Digital Departures, a project which aims to make Liverpool and the North West leaders in micro-budget feature film. The films were given a £250,000 budget each and the initiative includes Northwest Vision and Media with partners Liverpool Culture Company, BBC Films and the UK Film Council.

The other two films are Starstruck – a tale of a pair of WAG wannabes who end up kidnapping a Premiership footballer and Salvage – a horror film which taps into the "current cultural obsession with terrorism". Salvage is set within a cul-de-sac, the former set used by the soap Brookside. The story begins when a storage container with mysterious contents washes ashore, plunging residents into a world of violence and paranoia.

The films will be premiered in Liverpool this autumn.

Of Time And The City is described as a visual poem which draws on the first 28 years of the director's life in Liverpool until he left in 1973, with a soundtrack of popular and classical music, voices and radio clips.

The story moves beyond post-war Britain to a transition which ultimately swept away back-to-back houses with outside toilets, replaced by high rise blocks. Themes running through Davies' work include Catholicism, homosexuality, violence, death, loss, the glory of cinema, being an outsider and childhood.

Speaking about Of Time And The City, Davies said: "I wanted to capture the essence of what it was like to be a Liverpudlian. It was re-discovering the city that I knew and grew up in. I remembered going on the old overhead railway. I saw this footage which was like out-takes from Metropolis.It looked so beautiful."

He described his work as full of regret and anger at the way that old houses were pulled down and estates were built on the outskirts of the city.

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