"HAPPINESS isn't so bad for a woman. She gets fatter, she gets older, she could lie down, nuzzling a regimen of men and little kids, she could just die of the pleasure. But men are different, they have to own money, or they have to be famous, or everybody on the block has to look up to them from the cellar stairs." (from An Interest In Life).

Grace Paley's stories are full of witty and telling observations about life and the different ways it is lived and perceived by women and men. Now in her seventies, Paley developed a talent for listening at an early age. Her excellent ear enables her to reproduce the speech of many different strands of immigrant New York life: Jewish, black and Irish American.

A story gets underway when she starts to hear "a voice". Her narrators range from single mothers to feckless sons and talkative aunts. They are based on people she knows: friends, neighbours or members of her family. As a young woman she lived in an apartment block on 15th and 9th in Manhattan: "It was a rough street, there were several brothels up the block. Big trucks drove from Port Authority. But it was a wonderful place for children. There were so many of them. I was surrounded by Irish and Puerto Rican families."

The result: more characters, such as Mrs Raftery, an irresistible Irish American who sticks a knife (theatrically but not deeply) into her massive breast when her son tells her he wants to marry the Jewish girl who lives upstairs: "My son is my business, by love and duty."

The same Mrs Raftery has many wonderful things to say about the mystery of human relationships: "Men fall for terrible wierdos in a dumb way more and more as they get older; my old man, fond of me as he constantly was, often did. I never give it the courtesy of my attention. My advice to mothers and wives: Do not imitate the dimwit's girlfriends. You will be damnfool looking, what with your age and all. Have you heard the saying: `Old dough won't rise in a new oven'?"

Fascinated by people's stories, Paley likes to "memorialise their lives". This can be a sensitive issue when it involves her family, but she insists that although characters begin with recognisable traits, they soon escape into the welcome anonymity of fiction. So her young mothers whose irresponsible Latin lover husbands have absconded are not re creations of her own life? "No, I was married to the father of my two children for 25 years, and to the next guy for another 25 years."

SHE was born in New York in 1922 of unorthodox Jewish Russian emigre parents. Her father eventually managed to qualify as a doctor and presided over a largely female household including Grace, her mother and her aunts. Her stories are often populated by close groups of women, either family members or longstanding friends.

She has found the women's movement in general "a great liberation": "I was a woman at the early moment when small drops of worried resentment and noble rage were secretly, slowly building ... Every woman writing in those years has been supported by that feminist wave - the buoyancy, the noise, the saltiness."

An environmentalist as well as a feminist (she has long campaigned against nuclear power), she is also a committed pacifist (she demonstrated against the war in Vietnam and, more recently, the Gulf War): "The women working with me in the peace movement didn't want a slice of the pie, we wanted different ingredients in the pie, like no racism, no hatred, a better world for all, to stop the world from destroying itself."

Her irresistible sense of humour ensures that her stories are not marred by undigested ideology. She is aware that people find their happiness in different places, in ways that are often far from politically correct, and this tolerant breadth of vision informs her writing. Another factor in her immense popularity is her mastery of the wry descriptive sentence:

"Silence - the space that follows unkindness in which little truths growl . . ."

"If there was more life in my little sister, she would know my heart is a regular college of feelings, and there is such information between my corset and me that her whole life is a kindergarten . . ."

At that time, sexism and racism had no public life, though they were still sometimes practised by adults at home . . ."

"She began to love herself, to love the properties which, for a couple of years anyway, extracted such heart warming activity from him."

Her deadpan humour is a family characteristic, and is part of her Jewish heritage: "It's a helpful way of looking at the world, like having an extra flashlight. I can make a point better if I make it with a joke." Her story Wants opens with the memorable lines: "I saw my ex husband in the street. I was sitting on the steps of the new library. `Hello, my life' I said. We had once been married for 27 years, so I felt justified."

She has never written a novel - "Art is too long and life is too short" - and has published only three collections of stories: The Little Disturbances Of Man (1959), Enormous Changes At The Last Minute (1974) and Later The Same Day (1985). Much of her time has been taken up by her political commitments and the fight "against presumptuous authority". Now living in Vermont, she misses her days of campaigning in New York: "You could get a real day's work done in the city, handing out leaflets on street corners, talking to people getting them to sign petitions.

At the moment she is concerted about the arms trade: "America sends arms to other countries, arms that are only turned on us in the end anyway." She is "horrified and heartbroken" by Clinton, by "his meanness towards immigrants - even the legal ones who pay taxes - and his signing the Welfare Bill, thereby ending food stamps for lots of people. This meanness is coming from the Right all over the world. The Left has supported Clinton for so long that there isn't enough Left in American any more, but if you don't vote for Clinton, the other side is too horrible to think about." In Vermont, there is an independent Congressman who is a socialist, a fact which gives her some comfort.

She now has two grandchildren, and her political work is still fired by a determination that the young should inherit a world worth living in: "Every young thing, like a tree, should grow up happily." And most of her stories, though delving into tragic arenas - children's lives ruined by drug abuse; parents' lives truncated by cancer; Polish emigrants fleeing to America from famine - come to the same conclusion: that women and men will somehow muddle through, beget children and try and make the world a place where they can thrive. As one of her characters observes: "Rosiness is not a worse windowpane than gloomy grey when viewing the world."