It was high noon when Doreta Peppa, a woman with long, dark locks and owlish eyes, entered the Sanctuary of Olympian Zeus. At first, tourists visiting the Athenian temple thought they had stumbled on to a film set. It wasn't just that Peppa cut a dramatic figure with her flowing robes and garlanded hair. Or that she seemed to be in a state of near euphoria. Or even that the group of men and women accompanying her - dressed as warriors and nymphets in kitsch ancient garb - appeared to have stepped straight out of the city's Golden Age.

To the astonishment of onlookers, Peppa also began babbling Orphic hymns, before thrusting her arms upwards into the Attic skies and proceeding, somewhat deliriously, to warble her love for the gods of Mount Olympus. But, then, for the motley group of modern pagans coalesced around the temple's giant Corinthian columns, this was a special moment. Not since the late fourth century AD, when the newly Christian Roman state outlawed all forms of pagan worship, had a high priestess officiated on the sacred site.

Armed with white doves, Peppa, a former advertising executive, was not going to hold back - even if it meant defying the furious Greek officials and riot police gathered at the second-century temple's gates, unwilling to stop the ceremony for fear of provoking a violent confrontation. "Sixteen and a half centuries is a very long time to wait," she said. "After so many years of Christian persecution we were finally able to call on Zeus, our king-god, to bring peace to the world ahead of the [2008] Olympics. For us, it was a very, very big thing."

So big, that like a thunderbolt from the deity himself, the one-hour ceremony has achieved the near-impossible task of unnerving Greece's powerful Orthodox church. Since Peppa's performance 10 days ago, hierarchs have redirected the venom they usually reserve for homosexuals, Catholics, Jews, Jehovah's Witnesses, masons and the "barbaric" Turks at the "miserable resuscitators" of the degenerate dead religion. In fire-and-brimstone sermons priests have slammed the "satanic" New Ageists and fulminated against their idols.

For years, Orthodox clerics believed that they had defeated Greeks wishing to embrace the customs and beliefs of the ancient past. But increasingly the church, a bastion of conservatism and traditionalism, has been confronted by the spectre of polytheists making a comeback in the land of the gods. Last year, Peppa's group, Ellinais, succeeded in gaining legal recognition as a cultural association in a country where all non-Christian religions, bar Islam and Judaism, are prohibited. As a result of the ruling, which devotees say paves the way for the Greek gods to be worshipped openly, the organisation hopes to win government approval for a temple in Athens where pagan baptisms, marriages and funerals could be performed. Taking the battle to archaeological sites deemed to be "sacred" is also part of an increasingly vociferous campaign.

But Ellinais, whose members range from elderly academics to young professionals, is not the only sect to practise the ethnic Hellenic faith. Those who claim to "defend the genuine traditions, religion and ethos" of pre-Christians say there are at least 2,000 hard-core followers and, nationwide, more than 100,000 sympathisers. Nationalist extremists, attracted by the creed's emphasis on Hellenic glories, are helping to boost the revival.

"If you are brought up with Greek mythology, the idea you are the descendants of the ancient Greeks and imbued with the importance of ancient Greek culture, you have all the pre-requisites for such an inclination," says Nikos Dimou, the acclaimed author of a tongue-in-cheek bestseller, The Misfortune to be Greek.

Ninety-eight per cent of the population may officially be Orthodox Christian, but in many ways Greeks remain bonded to their pagan past. "OK, the ancients had hubris, but the concept of sin was totally unknown to them, as indeed it is in modern Greece," Dimou says. "Greeks today don't observe many of the 10 commandments. Their outlook on life and values are much nearer to pagan ideas than those of the austere Judaeo-Christian faith."

The exoticism of pagan rituals undoubtedly adds to the allure. Enter the Athens headquarters of YSEE, an umbrella organisation of pagans, and the first thing you encounter on feast days are white-clad believers offering libations before a life-size marble kouros symbolising eternal youth. Busts of Athena, Aphrodite, Hermes, Hera and Zeus cast their stony eyes on to an altar replete with burning incense, herbs and flowers. Housed in a decrepit apartment block, between a Kurdish-run cafe and a bathroom utilities store, YSEE has become a meeting point for pagans. Here believers, such as Vlassis Rassias, gather to discuss ancient Greek history and solace-giving gods.

Like pagans the world over, Rassias says he was drawn to polytheism by the religion's focus on humanity, ecology, cosmic connections and reverence for the past. But, like many in Greece, the 48-year-old banker adds that he was also attracted because of "the brainwashing" of the Orthodox church. "At school we were taught everything about the ancients except the way they worshipped. I found it very strange, and when I looked into it I began to see why," he says. "The Christians hated pagans so much that from the fourth century to the ninth century they destroyed their temples and libraries, killed their priests, closed their philosophical schools and, in one case, set up a death camp. It was genocide but priests don't want to talk about that today." Instead, he says, the Orthodox church insisted that Christianity had been spread, and accepted, peacefully.

Greece's pagans have found an unlikely champion in James O'Dell, a Croydon-born chartered surveyor who gave up his job to "serve the gods". Through the internet he has brought Apollo-loving pagans together in Britain - organising a ritual in Richmond Park in December - and disseminated information about the "plight" of pagans in Greece.

"I started a web page and was amazed at how many suddenly came out of the woodwork," says the 49-year-old, who lives between Athens and London and keeps an altar dedicated to Apollo in both homes. His own "awakening" began during a visit to ancient Delphi in 1990.

Greece's pagans will need every ally they can get in their battle with the immensely powerful Orthodox establishment. Church and state are still inextricably intertwined, and priests and parishes are financed from government coffers. "Greece is not like other modern European democracies - it is semi-theocratic," says Vassilis Tsantilas, 42, a computer scientist who experimented with Buddhism, Taoism and Islam before embracing paganism. "Constitutionally, there is no law that even allows for the recognition of other minority religions, which is why the Christians can go on persecuting us."

Last year, YSEE stepped up its campaign with a 14-page memorandum delivered to the Greek president. Among other things, it demanded that pagans not only be allowed to conduct baptisms, weddings, funerals and cremations but also be given a permanent place of worship within view of the Acropolis on the Hill of Nymphs.

"But our biggest demand is that our religion is accepted as a reality so that we can finally count just how many we are," Rassias says. "If the intolerance continues we'll go to the European court of human rights."

"I'd like to think that in 500 years things will be better," O'Dell says, with a smile. But Greece's pagans may not have to wait so long. Already they have come a long way from the days when exposure as a pagan could result in reprisals from business partners, family and friends. After the ceremony at the Sanctuary of Olympian Zeus, even the nation's media have stopped laughing at them.