The story behind Vashti Bunyan’s 1970 album Just Another Diamond Day has become legendary. Vashti made her first bid for stardom guided by Rolling Stones manager Andrew Loog Oldham. Her wisp of a voice and tall, elegant beauty suggested she could be an English Françoise Hardy, but it was not to be. Disillusioned, Vashti left London with her boyfriend to set up home on a Scottish island (recently acquired by Donovan). Penniless, they travelled by horse and cart, taking a year and a half to reach their destination, by which time they found there was no room for them.

Along the way, Vashti wrote delicate, evocative songs about her journey. Just Another Diamond Day stands out of time, which was perhaps its undoing - the album went nowhere and Vashti, resigned to its failure, sought other adventures away from music.

As the years went by Diamond Day became something of a holy grail amongst collectors. It wasn’t until the late 90s that Vashti became aware of the album’s cult status and it was duly reissued. Its reputation has only grown, becoming a touchstone for artists like Devendra Banhart and Joanna Newsom. The warm reception encouraged Vashti to return to music and Lookaftering, her first album in 35 years, was the result. Less folky and full of wistful ruminations on family life, it’s more modern and mature than Diamond Day, but every bit as magical.

Determined to give her new music the push it deserves, Vashti has spent much of the past year touring.

‘I’m kicking myself that I haven’t done it before,’ she laughs, ‘The first time around I was very isolated, I never played with other people. Having a band - it’s fabulous.’

The Zero Degrees of Separation tour will see her sharing a stage with Argentina’s lady of the loop, Juana Molina, San Franciscan folk-rockers Vetiver and London’s Adem with his famous box of musical tricks.

‘It’ll be like a revue,’ Vashti explains. ‘We’ll be doing our own sets but merging them from one act to the other.’

Adem, who along with Vetiver’s Andy Cabic, played on Lookaftering, hopes the tour will break down preconceptions of so-called ‘nu-folk’.

‘There are a lot of people trying to package up this sort of music and stick it on the road to make some money,’ he says. ‘What we wanted to do was something that was genuinely exciting and would challenge us and the audience. We’re all going to play as each others’ band. So I’m going to be playing a song and I might have Andy from Vetiver playing bass, or Juana Molina singing backing vocals.

‘I’ve been lucky enough to tour with all three of the other acts, so I’ve met them all and have a good idea of how we can make it happen.’

The tour kicks off what should be an interesting year for Vashti. February sees the release of Ballads of the Book, an album of collaborations between songwriters and poets, for which Vashti has worked with Glasgow writer Rodge Glass. Come summer, an album of her rare early singles and demos should appear. Then there’s a new album to write.

‘It’s just been the most extraordinary year,’ Vashti says of 2006, ‘All these things happening that I would never have dreamed of.’

Here’s to her 2007.

Vashti Bunyan, Vetiver, Adem and Juana Molina appear as part of the Zero Degrees of Separation Tour at ABC, Glasgow, Tue 16 Jan.