The maroon Vauxhall Cavalier sits outside SD Kells, the draper's on Market Street. A sign in the window reads 'Kids back to School'. It's a summer afternoon, mothers are buying uniforms for the new term, and families are milling around the shopping centre, shoulders bare and ice creams in their hands.

Suddenly the director, Pete Travis, calls 'Cut' and the scene falls apart. 'They all look too miserable,' he explains as everyone returns to their positions for another take. 'It's meant to look like a fun day out.' Part of the problem with long faces is the cold. The script may say August, but it is January in Ireland. So between shots the actors and extras discard their lollies and wrap themselves in blankets. But what makes it particularly hard for them to smile is the knowledge of what comes next.

We're in Navan, north west of Dublin, on the set of Omagh, a big Channel 4 drama that is guaranteed to provoke controversy when it is aired later this month. On Saturday 15 August, 1998, the Real IRA put a 500lb bomb in a car, parked it on Market Street in Omagh, a small town in Northern Ireland, and left it to explode in the middle of the shoppers, killing 29 people from all sides in the community.

The film chronicles both the build-up to the bombing and its aftermath. In particular it follows the battle still being fought by the Omagh Support Group - made up of families of the victims - to uncover the full facts behind the outrage after a Royal Ulster Constabulary investigation failed to bring those widely acknowledged as the perpetrators to justice. So far just one man has been jailed in the Republic on conspiracy charges related to the attack.

Next year, a British court will hear the Omagh families' landmark civil case for damages against the 18 men they believe were involved in the bombing. The broadcast of Omagh before the court makes its judgment will undoubtedly be criticised by some as interfering with the judicial process. But the film's capacity to generate debate goes much further. It also contains a strong condemnation of the RUC - for their mishandling of intelligence before the bomb and their shortcomings in the subsequent investigation.

Omagh is the work of film-maker Paul Greengrass whose Bloody Sunday made headlines in 2002. Its portrayal of events surrounding the deaths of 14 unarmed civilians in Derry in January, 1972 won it film-festival awards in Berlin and Sundance, but it was also accused of being 'virulently anti-British' in some quarters for its presentation of the role of the British army.

The Omagh Support Group was among the film's many admirers and it prompted them to approach Greengrass via the actor James Nesbitt (who starred in Bloody Sund ay). They believed that he could tell their story and get the world to sit up and take notice of the injustice they had suffered. From that first encounter at the Silverbirch Hotel in Omagh were born both the film and an exceptionally close and enduring partnership between makers and subjects which will be further reinforced tonight when the Omagh families are the first to see the finished version at a private screening. Only after that will the film be shown to anyone else.

Since Bloody Sunday Greengrass, whose background was as a documentary maker on World in Action, has been much in demand not only in British TV but also in Hollywood. The Bourne Supremacy, in which he directs Matt Damon, promises to be one of the summer's blockbusters. But his passion for fact-based drama and for matters Irish is undiminished, as he explained sitting in his west London offices, three months on from that day on location in Navan.

'Omagh and Bloody Sunday are for me two events that bookend the Troubles,' he says. An engaging and articulate enthusiast in his late forties, he runs his hands through his unkempt grey hair as he talks. 'There were many terrible and meaningful events in between, but Bloody Sunday was the moment at which the tide towards conflict became inevitable. It seemed to sum up several generations of injustice in one afternoon. And so there was a tacit consent in Northern Ireland for violence. And Omagh was the point at which that was reversed, when the tide to settlement became irreversible.'

Omagh is not, it should be said, a one-man crusade for Greengrass. It is, in his own words, 'much more of a collaborative effort than Bloody Sunday ' which he wrote and directed. This time around he has worked with British and Irish producers - Greg Brenman and Ed Guiney - and director Pete Travis. Greengrass co-wrote the script with Guy Hibbert whose dramas, including May 33rd and No Child of Mine, have made him a hot name in TV drama.

The pair share two core beliefs when it comes to fact-based dramas. The first is in painstaking attention to detail. In some other versions of the genre - such as Jimmy McGovern's 1996 Hillsborough or Jim Sheridan's 1993 In The Name of the Father - events and details are moved around much more freely to accommodate the writer's point of view. And the second is a fervent commitment to making campaigning pieces. Omagh stands out on both counts.

Nothing factual in the story it tells has been changed unless there is a good reason. So the bomb car is the right make, model and colour and has the right number plate. The Navan set corresponds to an exact model of Omagh High Street back in the production office. Every actor and extra is based on real people who were there on the day and whose story has been thoroughly examined. Such scrupulousness gives the film, those involved believe, an extra visual, emotional and moral power.

After the initial meeting with the support group there followed many months of intensive research. 'We had to be sensitive, thorough and take our time,' Greengrass emphasises. 'We needed to take the temperature, meet those not in the support group who had been affected, do the hard work and then decide if a film was even possible. Nothing was settled in advance.'

It was long-winded but won the admiration of Michael Gallagher, chair of the Omagh Support Group. His 21-year-old son Aiden died in the explosion. 'They did an amazing amount of research before they even got to the point of meeting individual families,' he says. 'There was so much information out there, they didn't need to use the families. They could have used fictitious families, as the BBC did recently when they made a drama about the troubles at Holy Cross School in Belfast, but here they took the more difficult path of dealing with people who were and remain very emotional. It would have taken very little to upset them.'

Part of the process of knowing everything about Omagh was to meet those outside the support group who had doubts about any film. As a result some victims have been taken out of the street scenes to avoid causing further pain to their relatives. Others, though, opposed the whole project. 'We talked and talked and consulted and consulted, but in the end,' says Greengrass, 'we decided that most people wanted a film.' Michael Gallagher puts the figure at 99.9 per cent.

The script was given its first airing at a meeting with the support-group families. 'It was an extraordinary evening that I will never forget,' says Gerard McSorley, the Irish actor who plays Michael Gallagher. 'We sat at a table and read out the story of the build-up to the bomb, the bomb, the psychological damage it left, especially in Michael Gallagher. And the people who had suffered so much sat and listened to us. I have never felt so totally inadequate.'

The Omagh Support Group members, however, did not flinch at what they heard. 'We decided early on,' says Gallagher, 'that we didn't want the script to be sanitised to spare our feelings. That would lessen its impact on audiences and on our struggle and however hard it was for us, it was after all only a film. We've experienced the real thing.'

In pursuit of their second shared aim - to make something campaigning - the Greengrass/Hibbert script takes as its focus the experiences of Gallagher and his wife Patsy (Michele Forbes). They have different ways of coping with their grief, Patsy being more private and less involved with the public work of the support group. It begins to come between them, but the key turning point in bringing them back together is the publication in December 2001 of a report by the Northern Ireland police ombudsman, Nuala O'Loan (played in the film by Oscar-winner Brenda Fricker) into the handling of the police inquiry into the bombing. It found that the victims, their families and the people of Omagh had been let down by defective leadership from the chief constable of RUC.

Placing so much emphasis on the O'Loan report is one of the aspects of the film that will anger some, not least Sir Ronnie Flanagan, then chief constable of the RUC, who said at the time the ombudsman's findings appeared that he would resign and commit suicide if it were true. Weeks later he produced a 190-page report accusing O'Loan of 'inaccuracies, unwarranted assumptions and misunderstandings'.

It is between such polarised positions that Omagh walks. If it is partisan, it leans unashamedly towards the families and their fundamental case that the police inquiry was flunked because success would have been inconvenient to the peace process. Greengrass, though, is more than prepared to stand up for any judgments the film makes: 'Fact-based drama has been unfairly attacked in the past because it's radical, edgy, questioning, has a voice of its own and a point of view. But some of those attacks have been fuelled by us, the makers, being unwilling to be accountable, to be open about what we have done with the truth in the name of drama. We have treated audiences as if they are not capable of distinguishing what is sensational, what is propaganda and what is reasonably pressing a point. We should not be coy about how you can only go so far by gathering facts. At a certain point you enter the imagination, you compress episodes, you select incidents and you synthesise it into a two-hour narrative. You have to be prepared to defend publicly those decisions.'

Omagh, all those involved in the film are determined, must not just be about the devastating events in a small town in Northern Ireland. It has clear, broader resonances - contained in a speech Michael Gallagher makes towards the end of the film - about how individuals can now hold the authorities and the state responsible for how they exercise their duty of care for citizens. 'We want people,' says the real Michael Gallagher, 'to see what terrorism can do to a family, my family, other families and to a community. Ultimately this film has not been made for the victims, but for a wider community so as to tell them about what terrorism really does and about the grief and striving to achieve justice that follows in its wake. If that message gets through it will have succeeded.'

· Omagh will be broadcast on Channel 4 on 27 May at 9pm