They're the aural equivalent of an Angela Carter novel or a Tony Millionaire comic strip, played on accordions and Victorian music hall strings in the trenches of the First World War, flitting lyrically through tales of Chinese trapeze artist mothers, true loves lost at sea, communal suicides, and injured sportsmen lamenting the success of the captain of the other team. The fact that they're from Portland USA makes this even more remarkable: they should belong somewhere in a lost, fractured Albion where tea and cakes has replaced crack cocaine as the afternoon tipple of choice.

In short, they're the band that was waiting for Burlesque to happen, and in Koko they've found their spiritual home, a crimson and gold Victoriana music hall with boxes and bars and an audience waiting to be entertained.

The Decemberists never do anything less than entertain. Before we're even five minutes into the show, lead singer Colin Meloy is lying prone on the stage, still strumming guitar, and giving us just a taste of what's to come. Then it's up for a rousing definition of Infanta, lead track from latest album Picaresque, with its thumping drums that call the audience to action.

From there it's on to This Soldering Life, from 2003's Her Majesty The Decemberists, a tender trenches love song from the only band in the world who have ever made beautiful music out of Corporal Bradley of regiment five, bathing soldiers and stevedores. It continues through tales of sporting failure and spies as Meloy heckles the audience then praises British hecklers, who he claims are the best in the world. With his encouragement, the audience applaud themselves.

Following on from Picaresque's suicide pact sing-along We Both Go Down Together, Meloy announces a new song, but with "this is only the second time we've played it", he fluffs the intro but laughs it off as they launch into a perfect second attempt. He asks the audience how many of them are going to All Tomorrow's Parties and seems disappointed that not many are. I feel glad, hoping that this will give hordes of chalet dwellers the chance to discover them; the audience here doesn't need to be converted.

The Legionnaire's Lament Song and From My Own True Love (Lost at Sea) fly into Billy Liar with its perfect refrain "'Til the radio plays something familiar/Plays something familiar" and he follows it with Los Angeles I'm Yours, a song that rhymes street and boulevards with orphans and oligarchs. You don't get that too often.

Then we're into audience participation mode again, with Meloy engaging us in his own bizarre form of rock gig calisthenics, encouraging us to wave our arms in the air and squat up and down when he tells us to. Even the people in the VIP boxes play along, as he launches into more accordion fuelled music hall perfection, finishing in triumphant style with 16 Military Wives.

A quick shake down and of course they're back, with Chimney Sweep's Victorian gothic tale of a poor orphan boy who gives a lonely widow the first sweeping she's had since her husband died. And if that wasn't enough, he ends the show by getting the audience to all sit down as he hypnotises the band to sleep one by one, only so that we can all rise again as the band play us out. Another fantastic evening, another rock pantomime as only the Decemberists can deliver. Miss them at All Tomorrow's Parties at your peril.

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Mercury Prize 2009 nominees