Archaeologists have resumed their search for a library of Greek and Latin masterpieces that is thought to lie under volcanic rock at the ancient Roman site of Herculaneum.

The scrolls, which have been called the holy grail of classical literature, are thought to have been lost when Mount Vesuvius erupted in AD79, burying the wealthy Roman city of Herculaneum and neighbouring Pompeii.

Previous digs have unearthed classical works at a building now known as the Villa of the Papyri, thought to have belonged to Julius Caesar’s father-in-law, Lucius Calpurnius Piso, who was known to be a lover of poetry.

The villa was found by chance in the 18th century by engineers digging a well shaft. Tunnels bored into the rock brought to light stunning ancient sculptures — now in the National Archaeological Museum of Naples — and 1,800 carbonised papyrus scrolls. The writings were mainly works by the Epicurean Greek philosopher Philodemus, who was part of Piso’s entourage.

Ten years ago two floors of the villa were discovered, as well as the remains of nearby gardens, ornamental ponds, a bath-house and a collapsed seaside pavilion. The excavation was halted in 1998 as funds ran out and archaeologists protested at the use of mechanical diggers by a private builder to smash through the rock.

The site was opened to the public four years ago, but has now been closed again so that archaeologists using picks and trowels can dig out the frescoed corridor or cryptoportico on the lower ground floor. They are also conserving mosaics and frescoes already found on the top floor to protect them from damp and erosion.

“Work can resume because we are combining archaeology with responsible conservation, which was not the case in the 1990s,” said Andrew Wallace-Hadrill, the director of the British School at Rome and head of the Herculaneum Conservation Project, which is funded by the Packard Humanities Institute to the tune of $3 million (£1.5 million) a year.

Maria Paola Guidobaldi, the director of excavations at Herculaneum, said that the new Villa of the Papyri dig was backed by a further ¤ million (£2 million) from the EU and the Campania region, and would last a year and a half. “We will proceed cautiously — and if we find more papyri or statues, we will be delighted,” she said.

Some historians believe that the papyri, which may have included lost masterpieces by Aristotle, Euripides or Sophocles, were being packed to be taken to safety when the eruption occurred. The scrolls would have been scattered throughout the 30,000sq ft (2,800sq m) of the villa by the violent force of the 100mph (160kmh) “pyroclastic flow” of ash, gas and mud.

Professor Wallace-Hadrill said that next year work would also begin on excavating the basilica, the great hall housing Herculaneum’s legal and administrative centre. It lies beneath a rubbish-strewn wasteland that was covered until recently by dilapidated modern housing, some of it built illegally with the connivance of the Camorra — the Naples Mafia. The local authorities have bought and demolished some of the buildings.

In the past some scholars have insisted that the priority at Herculaneum should be conservation rather than excavation. But campaigners led by Robert Fowler, Professor of Greek at Bristol University, and the novelist Robert Harris have argued passionately that the search for the “lost library” must go on.

The villa captured the imagination of the American billionaire J. Paul Getty, whose museum at Malibu, California, the Getty Villa, is a replica. The carbonised scrolls recovered so far were deciphered by computer-enhanced multispectral imaging.