It stands to reason that a choreographer would want to make a dance piece about a dance film. But even that fact only scratches the surface of the playful layers and brain-teasing meta-theatre which blur the lines between fictional-fiction and fictional-reality in Matthew Bourne's mesmerising new work.

Following the storyline of the 1948 Powell and Pressburger film, prodigiously talented dancer Victoria Page becomes the prima ballerina and muse in Boris Lermontov's company, taking the lead role in his avant-garde adaptation of Hans Christian Andersen's The Red Shoes. But while playing the role of the girl who wanted those shoes that would eventually dance her to death, Page falls hard for company composer Julian Craster, a love affair that threatens her working relationship with Lermontov and forces her to choose between romantic love and the love of her art.

Bourne has chosen music by Bernard Herrmann to score the piece and it swoons and soars with a romance and danger of both the 1940s and the world of theatre itself. Lez Brotherston's deceptively simple stage design kaleidoscopes between front-on and backstage views, allowing Page to walk straight from the audience onto the stage mid-performance. It also opens up theatre-curtains-within-theatre-curtains to frame real life moments in Craster and Lermontov's respective bedchambers as if they too were part of the show: which indeed they are. It's a surrealism that feels perfectly natural within the world Bourne has created, and as Page's mental state spirals out of control, Bourne uses this melting of realities to blinding effect.

His dance references tread fine lines too, between parody, pastiche and homage. Page's miserable music-hall turn alongside two clowning Egyptian dancers is offset by the expressionist brilliance of Lermontov's production of The Red Shoes in the first act. In the latter piece, angular tangos are backed by shadow-puppet houses, and bare-chested men splay their limbs earnestly against a projection of the cosmos. Though it feels as if Bourne is referencing a very recognisable type of dance, the effects are also beautiful and sincere in their own right.

Ashley Shaw as Page is an exquisite dancer, graceful, precise and able to drench every gesture in emotion, especially in her duets with Dominic North's Craster. Shooting straight through the glamorous and tragic heart of the post-war dance world, this is vintage Matthew Bourne in every sense of the word.

The Red Shoes is on tour until Sat 22 Jul; seen at Edinburgh Festival Theatre.