The King’s Head Theatre is nothing if not adventurous and ambitious. It’s a small space, with an unforgiving and unaccommodating pub attached, but it has an ambience, a charm and a history which is difficult to resist. Under the artistic directorship of Adam Spreadbury-Maher, it has had a chequered history: but it never stops trying to be the Little Theatre That Could.

Now playing there, in what is almost certainly a world first, is a season of Mozart’s Cosi Fan Tutte and a play by Australian author, Louis Nowra, called Cosi. It’s an interesting, and inspired, idea to play the two works together, because Nowra’s play turns on a production of the Mozart opera. Except, of course, it’s not any old production.

The Cosi Fan Tutte which sits at the heart of Nowra’s play is one directed by a press-ganged sort-of-director, involves no real operatic singing, and is performed by members of a mental asylum. It sounds ridiculous, and some sequences are, but actually it is a life-affirming play about the human spirit, the joy that comes from ensemble co-operation, and the healing and therapeutic powers of live theatre as a form.

Productions of plays by Australian authors are few and far between in London. This is, in many ways, unaccountable. There are many Australian plays worthy of attention over middling American or European works, but, like the works of Canadian authors, the work of Australian playwrights are cheerfully ignored. Actors and directors and translators are not – Sarah Snook is playing a lead role in the Old Vic’s The Master Builder; Andrew Upton and Benedict Andrews’s adaptation of The Maids is playing at Trafalgar Studios under Jamie Lloyd’s careful eye, and Andrews is often directing in London, the Young Vic’s A Streetcar Named Desire being a recent example, now playing in New York – but writers do not get much of a look in.

They should.

Louis Nowra’s Cosi is a masterpiece and the kind of play The National Theatre should be championing well ahead of other material currently being pursued by it. Written by an Australian and set in Australia, nevertheless its themes are universal and centre squarely on humanity and human relationships. It’s a laugh-out-loud funny play but also one which pulls you up and makes you think – and feel the pain and pleasure of people who, mostly, are never thought about.

Those whose mental faculties are challenged, one way or another, are often marginalised by society – as well as abandoned. Cosi forces an audience to look at those people, to recognise that, like everyone else, they have hopes, dreams, desires and a right to happiness.

Wayne Harrison’s production of Cosi is that rare theatrical pearl: exotic (the accents make it so), beautiful and perfectly nurtured. It glistens with wit and humanity.

The limitations of the King’s Head Theatre work advantageously to the setting of Cosi. It’s set in a ramshackle, partly burned down space, all the asylum has to offer its theatrically inclined inmates. Set designer Faye Bradley can play easily with the space, and what she achieves, on an obviously minuscule budget, is evocative and beguiling. When she plays her trump card (the notion of the garden) it seems as though millions has been spent on the production, so ingenious and resourceful is her work. This is in no small part because of the sterling lighting from Nic Farman, who, in step with Harrison, makes something out of nothing.

The narrative is ostensibly political, set in the time of the Vietnam War and involving disputes between conservatives and liberals, patriots and rebels. Convention comes face to face with non-conformity. Stereotypes about men and women are confronted.

Yet, really, it is a play about love – and the way that strangers can, if they take the time, and invest in each other, form bonds that protect and strengthen them, make them whole, make them better, more wonderful people.

Harrison understands this clearly and has assembled an ensemble of breadth, skill and strength. No one in this cast seeks to make themselves the star; each plays their own part as well as they can and with a spirited and all-consuming understanding, and thirst, for the greater good of the production. Everyone gets their moment and revels in it; everyone works together, singing from the same hymn sheet.

It is delightful and wholly engaging to watch. The final sequence, where the inmates, against all odds, stage their own demented version of Mozart’s glorious opera, is quite delicious.

This is the sixth production of Cosi I have seen, the first in London, but it is easily the best I have seen. It’s the kind of genuine triumph which could and should play on a major stage (perhaps the National’s Temporary Theatre) and tour. It pulsates with heart, savage humour and deft characterisation: the detail in the performances is quite extraordinary.

The story is simple enough. Lewis is engaged by social worker Justin to assist some inmates at an asylum to perform a play. Lewis, who is not really a director, discovers that inmate Roy has very firm ideas about what should be performed and how it should be performed. Despite the fact that no one can sing, Roy wants to stage Mozart’s opera because he regards it as the key to understanding humanity and beauty.

Lewis has to deal with a grab-bag of weirdos as his cast. Cherry, the wanna-be man-eater with a good heart but a jealous nature and a solid understanding of flick knives. Ruth, the bird-like delicacy unable to distinguish reality from dreams. Zac, the pianist who prefers being high on medication to playing Mozart. Roy, the would be maestro/Hal Prince of the asylum, with a deep love for music and a fear of truth. The taciturn Henry, a former lawyer with a paralysis that moves depending on how he feels but a deep conviction about the rights and wrongs of war. Doug, the pyromaniac not above setting his mother’s cats on fire in order to make a point and with a penchant for sex talk which would outclass any soccer locker room. Julie, the spiky, alluring girl with hidden secrets.

In his outside life, Lewis has girlfriend Lucy, who is cheating on him with his flat mate, Nick. The notions of female constancy which underpin Mozart’s sexist opera are at play with Lewis’ own life, as he finds himself attracted to Julie while distancing himself from Lucy.

In the end, Lewis chooses his new friends in the asylum over the life in his flat, with his girlfriend and mate, and finds inner strength and a better understanding of himself because of it. Things don’t work out quite as he might hope, but that doesn’t really matter; both Lewis and the inmates are healed and improved by the power of working together on a piece of theatre.

It’s uplifting in every way. It’s also very very funny, with Nowra providing as many one liners and clever asides as many an Oscar Wilde play. Yet, despite that, there are moments of aching, brutal honesty which grasp your heart and squeeze hard. It’s affecting and effective in equal measure.

The cast is quite superb, evenly matched and generously playing together as a ripe, rich ensemble.

Mark Little is in blistering, magical form as the theatrical Roy. All flouncing hair and wounded pride, Little’s Roy is a musical and theatrical tyrant as well as a little boy desperate for a place to shine. Superb comic timing, and a real sense for the rough edges of the character, make Little’s Roy a triumph. His final appearance with smoking jacket and cigarette-holder is as perfect as his wily manoeuvring between Lewis and Nick to get his way with the Mozart. It’s a performance which makes you long to see Little’s Falstaff, so richly mined is the character’s depths and shallows.

As the hapless Lewis, who grows from smarmy git to worthwhile hero over the course of the play, Paul-William Mawhinney is just as good as Little. Always in the moment, slightly glazed and grazed by the culture clash he experiences, his sweetness and charm ensures that Cosi is never unpleasant. His relationship with Julie could be awkward, even predatory, but Mawhinney imbues his character with a wide-eyed insouciance which is terrific. His clashes with Cherry and Doug are both hilarious and poignant, and Mawhinney misses no beats. His performance is much like a Mozartian melody – planned, soaring and full bodied.

Neil Toon pulls off the remarkable feat of playing two utterly different characters without, at first anyway, giving that away. His initial appearance as Nick is forgotten when he subsequently appears as the fire-loving macho fiend/little boy, Doug, so convincing is Toon. It is only after he reappears as Nick that it is clear that he has two roles to play. Even then, he disguises both with clever and compelling touches. It is quite marvellous that you come to care for the cat-murdering Doug over the two-timing Nick. Watch out for the zany moment catching Fruit Loops, as well as the flicker of uncertain fear which surges through his eyes when Lewis taunts him with pretend kisses. Toon is superb.

So too is Juliet Prew’s schizophrenic, flick-knife wielding Cherry. One moment a mother figure, the next a siren, the next a murderess – she is fluid and fulsome, an enigma wrapped up in complex desperately lonely woman. Sublimely unpredictable, Prew’s Cherry provides a deal of the humour, as well as a deal of the heart. Matching Prew, but in a very different way, was Susie Lindeman whose fragile, utterly loony Ruth was pitch-perfect. Queen of the OCD, but timid to the point of hysteria, Ruth is unpredictable and slightly frightening as a result. Lindeman invests such heart and openness in the character that this Ruth, as lost as a bottle in the ocean, is staggeringly delightful – it is impossible not to root for her in the final performance the troupe give to their fellow inmates.

There is a rawness and brittle undercurrent to Laura Garnier’s heroin addicted Julie which was seductive. Her speech about “junk” was pin-drop perfection. It was easy to see why Lewis succumbed to her considerable charms, not just physical, but spiritual. Garnier’s sensual performance as Julie contrasted splendidly with her more acerbic turn as the petulant narcissistic Lucy. Both were very believable women by whom Mawhinney’s Lewis might have been seduced.

In many ways, Nicholas Osmond has the funniest role: the mostly silent Henry, a traumatised soul. But after the bonding and the music affect him, Henry blossoms – and Osmond showed that remarkably skilfully, never overplaying his hand. There are deadpan moments of breathless comedy as well as eye-stinging passages of regret, remorse and riposte. It’s all cleverly, compactly done, earnestly, and completely convincingly.

Christopher Finn is gayer than gay as the whirly but possibly incompetent social worker Justin and serenely stoned as the musician Zac. Both roles afford him the chance for comic zest and he does not eschew the opportunities offered. He manages to evoke the spirit of Are You Being Served’s Mr Humphries and The Young One’s Neil in the course of one performance/two characters.

Harrison’s Cosi is a sheer delight. It makes the case for Australian writing to be better represented on London stages as well as showcasing the abilities of a group of skilful actors who should be employed more regularly on London stages. And it does that while being truly hilarious and achingly honest.

At the prices the King’s Head charges for admission, this is the best value theatre currently playing in town.