The first thing you see as you walk into the magnificent new medieval gallery at the British Museum is a vast hoard of gold coins. Displayed in a deep, haphazard pile glinting in the spotlights, they are so striking that you have to fight the urge to sink your hands in and feel the sensation of ancient gold running through your fingers.

The coins, 1,273 of them, are from the Fishpool hoard, discovered along with various items of jewellery in 1966 during building works in the village of Fishpool in Nottinghamshire. According to James Robinson, the curator of the show and author of a splendid accompanying book, the hoard could have been part of a fund raised by Margaret of Anjou in support of her husband, the deposed Lancastrian King Henry VI, and deposited during the Wars of the Roses.

Medieval England enjoyed a highly sophisticated visual culture. Regular processions, ceremonies and rituals allowed colourful displays of ornaments and ritual objects designed to project the power and mystique of the royal family and the nobility on to the minds of the people.

The British Museum owns one of the pre-eminent collections of medieval art, artefacts and archaeological pieces in the world. For 25 years it has been languishing in an uninspiring gallery that many visitors unfortunately treated as the corridor on the way to the Egyptian section.

Now the collection, which includes the famous Royal Gold Cup, the beautiful Dunstable Swan Jewel and many other unique works, is being redisplayed in a renovated first-floor gallery (formerly used for storage). It has been given the space, the context and the focus to show a degree of sophistication that may surprise many.

The treasures range from glittering jewels to ecclesiastical vessels, walrus-tusk reliquaries, scientific instruments and some of the earliest printed images. In their new setting they demonstrate that the advances of the medieval era, covering the period from 1050 to 1500, were just as innovative, artistically and intellectually, as the more widely known flowering of the Renaissance.

This new gallery displays the material culture of a period that engendered enormous technical, scientific, intellectual and social changes. The early foundations of Parliament, of universities, hospitals and banks were all laid during medieval times. England's civil liberties rest on the achievements of the Middle Ages.

The display is divided into secular and devotional art, with a third section on international influences. On one side of the gallery we find works commissioned by royal and noble patrons and by members of the newly emerging merchant class. On display here is the massive, highly decorated sword of state, a ceremonial weapon almost two metres in length.

The Knights section is splendidly romantic, containing a bone casket delicately carved with scenes from Tristram and Isolde, and a casket made in the enamel workshops of Limoges, dating from about 1180, and decorated with images of courtly love. Inspired by medieval love poetry and the chivalric ideal, the casket depicts two women, provocatively dressed in clothes clinging to their arms, thighs and breasts. One is being serenaded with music by her lover; the other has her lover held round the neck with a leather halter. He kneels in submission at her feet while in the other hand she holds a falcon, the symbol of a lover's desire.

On the devotional side of the gallery, we find a set of beautiful mosaic tiles from the pavement of Byland Abbey in North Yorkshire, chalices, altarpieces and reliquaries, as well as items collected by ordinary people, such as the pilgrim souvenirs, made of lead, bought by visitors to shrines, many of which have been found preserved in mud on the banks of the Thames.

The new display highlights how far-reaching was the cultural and artistic legacy of the medieval period. Not only did the translation, circulation and preservation of classical texts enable the development of Renaissance thought, but many facets of our more recent artistic traditions can be traced back to medieval times.

The Gothic revival of the 19th century owes its ideas, of course, to the medieval period, harking back to what was known as the Age of Faith. Pugin's decoration of the façade and interiors of the Houses of Parliament exemplifies this return to the Gothic spirit. The Pre-Raphaelites too, particularly Edward Burne-Jones, wished to return to the spirit of the medieval masters, to rediscover the lost age of chivalry and romance.

It could even be argued that the cultural and artistic legacy of the Middle Ages extends to contemporary art. Tracey Emin's work My Bed, exhibited as a Turner Prize entry at the Tate in 1999, is not just an object. It contains something of its maker, the essence, if you like, of Emin herself. Although perhaps not intended as such, it is in its own way a reliquary in the medieval tradition.

The Paul and Jill Ruddock Gallery of Medieval Europe opens on Wednesday at the British Museum (www.britishmuseum.ac.uk). Masterpieces of Medieval Art by James Robinson is published by the British Museum Press, £19.99

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