Donegal is the county for the contradictions. Geographically, it's far up there in the north, but politically, it's defined as being located down in the south. Touted as remote and romantic "Real Ireland", tourists arrive to discover Donegal's houses bear more relation to surreal versions of Spanish haciendas than to John Hinde's promised images of thatched cottages. And, as for the definition of traditional music in that county with the vexed boundaries, it can be applied equally to country and western as to fiddle and sean nos.

The O'Donnell family name is synonymous with country music in this part of the world. And cups of tea. Daniel O'Donnell was hosting his tea parties, helped out by his now-famous Mammy and sister, Margo, long before Mrs Doyle ever started chanting her mantras on Father Ted. Daniel is indisputably the Country King of Kin-casslagh, where the O'Donnells hail from. And Margo O'Donnell, who celebrates 34 years in the music business this year, is described by her publicist as "The Queen of Country and Irish."

Why not country and western? "Western to me is cowboys and yee-ha," explains Margo. "That's American, not Irish." What future does she think country music has in Ireland? "I don't think we'll ever lose the feel for country here. Dublin might like to think it's all tiger, but there are a heck of a lot of country fans in this city, although they don't like to admit it. You just have to look at the Tudor Rooms in Barry's Hotel and the crowd they get there."

Then Margo clenches her fists and brings them down on her knees. "But I don't think we can go on making country music with the same drone either," she says. "We have to take country music and re-invent it."

Margo O'Donnell started her career at 13 by singing with the seven-member band, The Keynotes, in 1964. One of the songs which she recorded with them, Road by the River, went to number two in the Irish charts in 1968. Still only 17 at the time, she was Ireland's Spice Girl before Dana from Derry introduced us to "Snowdrops and Daffodils".

Margo left The Keynotes to join Country Folk in 1969, and by the following year, she had her first Number One with I'll Forgive and I'll Try to Forget. Since then, 35 albums have appeared, including The Girl From Donegal; New Beginnings; Margo - Irish Requests; Margo - Three Leaved Shamrock; and Destination Donegal.

She's recorded duets with Larry Cunningham on Hello Mr Peters and with Daniel himself on Two's Company. She's appeared in New York's Carnegie Hall, London's Albert Hall, and the Grand Ole Opry in Nashville. Due to be released this month is her 36th album, The High- way of My Life: In the Shade of the Family Tree, which features tracks with Dolly Parton and Maura O'Connell.

Whatever way one looks at it, Margo has had a long and consistent career. "In the 1970s, Margo sold more records than The Beatles," reports Shirley Jones, Margo's publicist. Sold more records where? And for what period of the 1970s? And where did Shirley get this information? "It's common knowledge within the business," she says. This blurred boundary between fact and hearsay seems to filter through many levels of Margo's life. Like the rumours. Ah, the rumours. They seem to accompany every conversation about the O'Donnells: that Margo is actually Daniel's mother; and that either Daniel or both himself and Margo are gay.

"I get rung up by the British press all the time," she says, looking off into the middle distance. "Asking me those things. But I was 10 when he was born. Can you imagine a 10-year-old being pregnant in Donegal in the 1960s, and that nobody would notice?"

All the official interviews cite 1951 and 1961 respectively for Margo and Daniel O'Donnell's years of birth. What's curious about this particular rumour is simply that it keeps resurfacing, even though the apparently clear facts would seem to prove it impossible. "Daniel and I have talked quite a lot about it," she admits. Then she says, looking puzzled and frowning, "I don't think he is gay. I really don't."

The Highway of My Life is the first album to appear for three years. "Two years ago, I thought I was going to die," she says, telling of the blood disorder within her white blood cells which has meant regular stints in hospital over the last couple of years. "I put my faith in God and I'm here today thanks to Him - with the help of doctors, of course," she adds. Then she leans across the table and pats my knee. "There's a club called the Galtymore in Crickle-wood in London. It's a big venue and I've played there a lot over the years. Well the rumour got round (that word again!), when I was in hospital, that I was dead! And there was a three minute silence for me in the club. Other people usually only get one minute."

The smile fades. "It sounds corny," she says hesitantly, "but I know I have the best fans in the world. When I was sick, a whole room in the hospital was filled with flowers and cards from my fans. It showed that so many people were caring about me." Yet fans are, by definition, a homogenous mass of usually anonymous admirers, rather than family or friends. That hospital room sounds an empty place, despite the flowers.

There are 5,000 members in the Margo Fan Club. Approximately two-thirds of them are in Britain and Northern Ireland; the rest are in the US, Australia and the Republic. Margo, Treasured Memories, a 30-page brochure, which is available through the fan club, is open on the table in front of us. Margo flicks through to a page entitled "These photographs speak for themselves." There are three heart-shaped photos of Margo and her ex-boyfriends; John Byrne, Paschal Mooney; and Tony Tracey, who died nine years ago.

There's also a photo of Margo's wedding invitation, for April 17th, 1979. "He jilted me two weeks before the wedding," she says. "There's no picture of him in here, because it's meant to stand for the absence." She has never married and has no children. "Margo's dream was always to get married and have four children, but dreams don't always come true," reads the caption over the ill-fated invitation, inviting guests to a reception in Letterkenny's Golden Grill. "My life is like an open book," she says, turning the pages.

Two years ago, Margo went to Nashville, where she met Dolly Parton for the first time. "We were waiting for her to turn up in the recording studio and everyone was nervous except me. Then I saw this vision in blue through the glass, and Dolly came in and put her arms around me and we've been friends ever since." The pages of the brochure are turned again. There they are, Margo and Dolly, arms entwined. "I'm telling you, Dolly gave me the faith to live again. Without her encouragement, I'd never have done this album."

So will we see Dolly in Ireland for the launch of the album? Margo giggles. "Oh yes, I think we will. Dolly said she's going to come and have one quiet night in my house in Castleblaney, and then she's going to kick up her heels and have fun. She likes Guinness, you know. And fun."

So what are Margo's plans for the future? "Dolly's going to listen to old Irish trad stuff, and we're going to get together on that." What does she define as "old Irish trad stuff"? "Oh, all those old time waltz things. Tunes like The Cliffs of Dooneen. That sort of thing. I've been to Dolly's place and recorded her sort of music, and now she's coming here and doing the Ireland thing. We want to bring a new angle to the old tunes. Reinvention."