The story of Faust, from its origins in German folk tales through to its artistic realisation in the works of Christopher Marlowe, Goethe and Charles Gounod and its later interpretation in a variety of media, remains the most oft-retold and influential works in German literature. To this day, it is regarded as potent dramatic stuff, and despite its religious trappings, it carries a message about the destructive effects of self-centred desire at the expense of all else that reach beyond the theological and right into the heart of modern western existence.

The phenomenal popularity and influence of the tale can be measured in the sheer volume of adaptations over the years. These include written fiction, plays, operas, stage musicals, rock songs, classical music, comic books, manga animes, video games (Wikipedia lists 15 games that include characters or plot elements from the story) and, of course, movies. If you want a further barometer of its influence here, there were at least seven film versions completed before 1920. In the years that followed, the story has been reworked as comedy (Bedazzled, twice), dark thriller (Angel Heart), surrealist animation (by Jan Svankmajer in 1994), and even comedy-musical-horror (Brian De Palma's The Phantom of the Paradise), and that's not counting the numerous straight adaptations of the tale, right up to Brian Yuzna's 2001 Faust: Love of the Damned. You'd have to have led a very sheltered existence to have not come across the story in one form or another.

In the realms of silent cinema, which is to say cinema itself, German director F.W. Murnau is a true artistic giant. You want proof? See his first American film, Sunrise, once described by the influential Cahiers du Cinéma as "The single greatest masterwork in the history of the cinema" and by none other than John Ford as the very future of the medium itself. And then there's Nosferatu, eine symphonie des grauens, the first adaptation of Bram Stoker's genre-defining novel Dracula, and still for my money the greatest of all vampire movies. As it was with Nosferatu, so it is with Faust. Murnau may not be the only one telling the story, but once again he set the benchmark, and few that followed have come close to matching the visual poetry of his interpretation.

The film is based largely on part 1 of Goethe's play, with influences from Marlowe and a few significant inventions by Murnau himself. In a world beyond our own, Mephistopheles wagers the Archangel Gabriel that he can completely corrupt the elderly professor Faust – a good man who has dedicated his life to science and healing the sick – and gain control of his soul. The prize if he is successful? The earth itself. Now I have to say that although the angel is acting out of true faith that goodness will always triumph over evil in any man, this is a seriously bloody reckless bet to make. But I digress. Mephistopheles knows just how to entrap the professor and unleashes a great plague upon the people of his town, prompting its citizens to turn to the learned Faust for help. But his treatments prove ineffective, and in desperation he acts on information found in a religious tome and summons the demon Mephisto, who gives him the power to cure the villagers, but when they realise just where these new skills came from they immediately turn against the well-intentioned professor. In despair he attempts suicide but is stopped by Mephisto, who transforms him from an old man to the virile youth he once was and tempts him with the (half-naked) figure of the Duchess of Parma, the most beautiful woman in all of Italy. A superbly realised flight across the landscape later, they drop in on the Duchess's wedding feast – Faust woos the girl while Mephisto sorts out her would-be husband. But at the very moment the young Faust is about to have his way with the Duchess, the time runs out on his pact (visualised in a rapid track towards an hour glass, a shot that is now a filmmaking standard). He is now faced with a choice – return to the helpless old man that he was or stay as he is and deliver his soul into Mephisto's clutches forever.

Even those unfamiliar with the story (there must be some) will have a pretty good idea which option the now young, sex-hungry Faust selects. He has his youth, he has Mephisto to act on his every command, and soon he hungers for the town that long ago was home. Transported there by Mephisto, in no time at all he is chasing after the beautiful and virginal Gretchen, who, with a little demonic assistance, falls head-over-heels in love with this handsome young visitor. Things for young Faust could not be more blissful, but he has become intoxicated both by his new life and the power he is able to wield through Mephisto, and seems to have completely forgotten that he is dealing not with a benevolent genie, but a most malevolent demon.

This almost operatic storytelling lends itself well to the grand gestures of silent cinema, but it takes a filmmaker of Murnau's unique vision to shake off the theatrical elements and realise the story in such vibrantly cinematic terms. When dealing with great silent cinema you inevitably find that some of your critical tools have been reversed – whereas in a  modern film you might find yourself ticking off the borrowings, here you're more likely to be noting the scenes and images that were later to be recycled by others. The story may be old but the film itself is a true original, and the imagery and cinematic technique on display here are the products of the filmmakers' collective imagination rather than a distillation of their own earlier viewing experiences. And what imagination. There's barely a shot in the film that does not prompt you to draw breath at the exquisite perfection of its composition, and there are a fair few that will have you gawping in disbelief. But this is never purely decorative and is always crucial to Murnau's very visual storytelling technique. When, for example, Mephistopheles towers above the town, slowly spreading his wings to block out the sun and unleashing a dark cloud of plague, this is not just a gobsmakingly imposing composition, it vividly suggests his awesome power and sinister intent. I would imagine that back in 1926 this was a genuinely terrifying image – even today, after many years of exposure to horror literature and movies, it gave me the serious creeps.

Superimposition, later to prove such a vibrant technique in Sunrise, is brilliantly used here, placing rings of fire around Faust, and the horsemen of the apocalypse (all three of them – they appear to be a man short) above his head as he summons Mephisto, transforming a memory into a vivid hallucination for Gretchen, and sending a scream flying across the landscape to distant ears. The lighting is consistently gorgeous and always expressive, Murnau's use of light and shadow drawing on his theatrical experience with Max Reinhardt and having subtextual as well as artistic purpose, while the sometimes expressionistic set design (the view of the town from Gretchen's house can't help but recall The Cabinet of Dr. Caligari) suggests an instability to Faust's new reality and prefigures the nightmare turn the narrative is soon to take.

The grand guignol and dark drama of the opening scenes lightens considerably in tone when we arrive at Heimat (literally "home") and Faust begins his romantic pursuit of Gretchen. Even Mephisto is transformed from his unsettling first appearance into the film's comic relief, mirroring Faust's wooing of Gretchen by pretending to flirt with Martha, the village Wiccan, which initially allows him to cop a feel but later has him running from her amorous advances. Cheery and engaging though he is at this point, Mephisto never forgets his malevolent purpose for a moment, and at the very instant Faust gets his girl, Mephisto is down the pub setting him up for an almighty fall.

It is here that the film undergoes a tonal shift and delivers a series of emotional body blows that really register. Faust almost drops out of the story for a while and it's Gretchen who gets to suffer (on the commentary it is wittily suggested that the story takes a Lars von Trier turn). To start going into detail about where the plot goes from here would be inappropriate for newcomers – safe to say it's uncompromising and genuinely affecting stuff, and leads to a mother of an ending that has been very nicely tweaked from Goethe's original.

Religion, inevitably, is at the core of the film, the narrative itself revolving around a wager made between heaven and hell, and Mephisto has come to earth to corrupt and destroy, just as we have always been warned. God is good and the devil is very, very bad, and putting your trust in the latter is really asking for trouble. This is no big surprise for a film made in Europe in 1926 – what is surprising is that those who live by religion are shown to be judgemental, intolerant, easily led and generally unpleasant (I was really in sympathy with Mephisto when, on hearing local parishioners singing their praises to God, he winces in pain and jams his fingers in his ears). When the plague is unleashed, they would rather die of it than be treated by a man who may, perhaps, have consorted with demons (they decide this because he shies away from a cross – this was later to become the mark of a vampire, but interestingly not in Murnau's Nosferatu). Later, the good people of Heimat behave appallingly towards Gretchen, culminating in a false accusation for a tragedy that their own self-righteousness heartlessness is directly responsible for bringing about.

Faust is up there with the giants of silent cinema, a magnificent and truly cinematic realisation of one of the most celebrated of literary dramas, one genuinely innovative and forward-looking in its film technique. Its astonishing visual inventiveness is made all the more impressive when you consider that its often complex imagery was achieved not at some high priced effects house, but on set and in-camera by Murnau and his team (cinematographer Carl Hoffman deserves a special mention here), and yet I'd take it over even the most perfectly realised CGI any day of the week. Any way you look at it, Faust is a fabulous achievement and that rarest of cinematic beasts, a fine entertainment that comfortably wears the badge of great art.

Included in Masters of Cinema's 2-disc DVD set are two versions of Faust, identified here as the International and Domestic versions. Now this is no case of a simple recut for the home market – Faust was filmed simultaneously with two cameras to produce two edits, with the best takes used for the domestic print and the lesser ones for the international release. Structurally the two films are virtually identical – the differences are in the framing of specific shots and the editing pace and, occasionally, shot order. It actually makes little difference to your overall enjoyment of the film, but does effect individual scenes in subtle (and occasionally quite dramatic) ways. The general opinion, and I am not going to argue with this, is that the domestic cut is superior. And there's another thing...

OK, the film was made in 1926 and allowances have to be made for image quality and the detrimental effects of age and imperfect storage. With that in mind, the quality of the print on the international version is pretty damned good – black levels are solid and detail is very reasonable for a film of this vintage. Inevitably there are dust spots, scratches and even the occasional bit of damage, but on the whole the film is in very good shape and the cleanliness of the print is is remarkable.

But watch the international version first and you'll be especially impressed with the domestic print. Only recently discovered and in astonishingly good condition, this version was reconstructed by Luciano Berriatúa for Filmoteca Española from nitrate dupe negatives printed by UFA in 1926 and a number of other international sources. Detail and shadow detail in particular is noticeably superior to the international print, something usefully highlighted in the comparison featurette (see below). The picture is framed 1.33:1 within a small black border, presumably to avoid information loss on CRT TV overscan.

There are two music tracks available for the domestic print, a full orchestral score composed by Timothy Brock and a new harp score composed and played by Stan Ambrose. Sonically, both sound very good, the Ambrose score in particular, and which one works best is very much a matter of personal preference. My own choice is very much the Timothy Brock score, a handsome piece that perfectly matches the film's dramatic tone. I have to admit to not being particularly fond of the harp as a solo instrument, a prejudice that inevitably influences my choice, but I would also argue that the Stan Ambrose score serves the film less well, rarely underscoring or emphasising the mood or dramatic thrust of individual scenes. Indeed, the tone and style of the piece varies little throughout, which can't help but make the score sound more like a decorative extra than integral to the film. Like I said, a matter of taste. The International version has only the Brock score. Works for me.

A brief note on the DVD cover art, which I presume is a reproduction of original film artwork and looks splendid, but has the title written in old-style gothic text, with an 's' that looks more like a modern 'r'. Not a problem if you know what you're looking for, but this may be an issue for the potentially casual buyer. On seeing the DVD box, my girlfriend picked it up, looked at it with interest and then asked, "What's it about?" "Well, the story of Faust is…" I began, to which she replied, "Oh...FAUST! I didn't realise!"

The extra features are spread over the two discs. Although not great in number, their quality more than makes up for this.

The prime extra is on disc 1 (the domestic print) in the form of a Commentary by critic and journalist David Ehrenstein and the US correspondent for Cahiers du cinéma Bill Krohn, the pair responsible for the highly informative and entertaining commentary on The Savage Innocents. On the evidence of that film and their contribution here, Masters of Cinema would do well to keep these guys sweet. They clearly love the film (no arguments here) and really know their cinema history, citing a whole string of works influenced by Murnau and Faust in particular, including Fantasia (which they describe amusingly as "a much lesser work"), The Devils, Citizen Kane, The Ten Commandments, The Wizard of Oz and the works of James Whale and Terry Gilliam, to name but a few. It's a consistently fascinating and enjoyable listen, and really does add to your enjoyment and appreciation of the film itself.

On disc two there are two very interesting featurettes.

A Comparison of the Domestic and Export Releases (26:47) very usefully and clearly highlights some key differences between the two versions, including the framing of shots, the editing and, perhaps most startling in the pub scene, the very visible difference in clarity and detail.

Tony Rayns on Faust (37:51) is a gunsight-framed, black-and-white interview with one of MoC's more regular collaborators, though usually on their releases of Japanese films, which is Rayns' real area of expertise. There's not much to look at, but what is said is of considerable interest, as Rayns provides background on the evolution of the film, the influence of Max Reinhardt, information on Murnau himself, and even the reasons for shooting two versions at the same time (whether you buy into the cost saving suggestion when UPA were apparently making duplicate negatives anyway, from which this restoration was largely drawn, is another matter).

Finally, we have the usual Masters of Cinema Booklet, which contains a detailed essay on the film by Peter Spooner, and a shorter one by R. Dixon Smith on the multiple versions of the film. Not as densely packed as some of their booklets, this is nonetheless a typically interesting read.

Old story, simple moral, religious overtones, but oh, what a movie this is. Many regard the tale itself and a piously simplistic one, and they may have a point, but in an age where the pursuit of wealth and its material trappings with no thought of the consequence to others is regarded by many as a good thing, the underlying message still has validity. But as Tony Rayns points out, what make this great cinema is what Murnau and his team do with it, creating a film that prompts us to marvel at the possibilities of the medium and the skill and imagination of its pioneers.

Masters of Cinema have done it again with this excellent 2-disc release, featuring both versions of the film, two scores, a first rate commentary and two very informative featurettes. If silent cinema is your thing (and if you are a true film fan then it should be), then you are in for a treat.