In her Booker Prize-winning novel Possession: A Romance (1990), AS Byatt tells the charming story of two contemporary literary academics who are researching the life and work of the Victorian poets Randolph Henry Ash and Christabel LaMotte. Ash is a recognisable late-Victorian archetype, a high-minded scholar who reads prodigiously in science and philosophy as well as literature. Like Byatt, he is a religious sceptic. But also like Byatt, he is a fabulist, with a profound interest in mythology and creation narratives.

He might not believe in God but he is fascinated by stories about the gods and, in particular, Icelandic sagas and old Norse myths. One of his long narrative poems is entitled “Ragnarok”, the day of doom in Norse mythology, when the gods destroy one another and the world in a final, cleansing war of annihilation. For Wagnerians, Ragnarok, or the last battle, is more familiar as the Götterdämmerung, the concluding opera in the Ring cycle.

In Possession, Byatt reveals herself to be a formidable ventriloquist and writer of pastiche as she offers up extracts from the notebooks, letters and poems of her fictional Victorians. So, in one sense, long before the publication of her latest book, she has already written the story of Ragnarok in the form of an epic poem of the same title by one Henry Ash, parts of which appear in Possession.

What obsesses Ash (and, by implication, Byatt) are the similarities, echoes and repetitions in the myths of different cultures, as well as “the existence of the same Truths in all Religions”. From this, he concludes that our creation myths are not divinely inspired or metaphysically true but the work of human imagination, no more or less.

And it’s the imagination, above all else, that is the true subject of Byatt’s Ragnarok, which is the latest short novel in the Canongate Myth Series (other offerings have included David Grossman on the story of Samson and Margaret Atwood on Penelope and Odysseus).

The central character is not one of the gods but a young girl, whom we know only as “the thin child”. The ostensible setting is England during the second world war. The girl is dreamy, bookish and isolated. She has little recall of the world before the war started. Her father is an RAF pilot on active service in north Africa and, in her loneliness and confusion, she tells herself he will never return.

The child’s comprehension of the world and the expectations she has of it are enlarged and excited by the stories she reads. After being evacuated to the “ordinary paradise” of the English countryside, she discovers a copy of Asgard and the Gods, a book of Norse myths, which she reads together with John Bunyan’s The Pilgrim’s Progress. (Byatt has written many times of her admiration for the great storytelling compendiums: The Arabian Nights, Boccaccio’s Decameron, Ovid’s Metamorphoses, and so on.)

The cover of Asgard intrigues the girl – a “rushing image of Odin’s wild hunt on horseback tearing through a clouded sky amid jagged bolts of lightning”. (The image of Odin and the wild hunt was also a favourite of Adolf Hitler, for whom the Norse myths were a source of endless inspiration.)

Byatt peels back the cover of the book that the girl reads and takes us deep inside it as she delights in reimagining the twilight of the gods and the destruction of the world. Her paragraphs are constructed from short, rhythmic sentences, which have a parable-like simplicity. She favours compound nouns (“World-Ash”) and massed adjectives. She combines the precision of science writing (she is very particular about the names of flowers and trees and creatures) with wild flights of fancy. Like the thin child, she loses herself in “an ecstasy of imagination”.

Nature is presented as nothing but a continuous Schopenhauerian cycle of living and dying as “creatures ate and were eaten”. In one scene, a vast, ravenous, snake-like creature, Jormungandr, sees a shape moving in the darkness and bites it. The pain is excruciating; she has bitten her own tail, which was “wound round the earth like a girdle” – an extraordinary image.

In an afterword, Byatt says that it was through first reading the Norse myths as a child that she began to understand “that the Christian story was another myth”. Myths did not satisfy her as fairy stories did. They puzzled and haunted her mind. They were encounters with the “inapprehensible”. And yet, when approached by Canongate, she knew exactly what she wanted to write: Ragnarok, “the myth to end all myths”.

Like Wagner before her, Byatt dares to dream how the world might end but her 21st-century Valhalla is a kind of ecological graveyard, a site of mass extinctions and vanished species. So this rewriting of the Ragnarok is a story for our time of overpopulation and anthropomorphic climate change, and of all time.