TUCKED away in a little university art gallery in the north-east of England (the Hatton Gallery at Newcastle-upon-Tyne) is one of the least known masterpieces of 20th century art. This bizarrely beautiful work, the Merzbarn relief, is by the German artist, Kurt Schwitters, born in Hanover in 1887 and one of the great figures of the European avant-garde between the two world wars. He constructed this vast edifice on the interior wall of a barn in England's Lake District not long before he died in 1948; he had just been made a British citizen. Obscurely displayed for many years, the Merzbarn relief has recently been moved to a new permanent room devoted to his art.

The work takes the astonishing form of an old dry stone wall about 15 feet (4.5 metres) long and eight feet high, abstractly overlaid for the most part in ridges, orbs and crevices modelled out of painted plaster, twigs, wire, garden canes and other materials. On closer analysis, the Merzbarn contains strange objects secreted within its undulating mass. There is a tin can painted red, a china egg, stones from a local stream, a segment of a cartwheel and a piece of guttering. A miniature collage framed in metal is infilled with tiny found objects. Reminiscences about the adult Schwitters invariably describe how he used to keep his head bowed when out of doors, obsessively scavenging for bits of junk for his collages, constructions and sculptures.

The barn relief takes no recognisable, figurative form though its ascending central shape is wing-like, and one modelled area may evoke a face with huge, goggling eyes. This culminating work of Schwitters's life is the only one of his three major three dimensional constructions that survives. The Merzbau (Merz-building) or Cathedral of Erotic Misery, on which he worked steadily in his rather grand family apartment in Hanover between 1920 and 1937, was destroyed in an Allied bombing raid in 1943. It has since been partly reconstructed from photographs, and can be seen in attenuated form at the Sprengel Museum in Hanover. The second of his giant assemblages—in an isolated barn on the nearly uninhabited Norwegian island where he first settled as a refugee—was destroyed by a fire in 1951.

The Merzbarn in the Lake District was made at a desperate time in his life, when Schwitters found himself subsisting, with a serious heart condition, in dank English lodgings on the proceeds of academic portraits and landscapes, despondent that he could not even obtain an interview with the director of the National Gallery in London.

The English, with rare exceptions, were unsympathetic to his loud, polemical style, his declamatory poetry based more on sound than sense, his pictures assembled from bits of detritus, his artistic pranks and his love of outrageous nonsense which he used to deflate and then liberate his audiences. It was only a grant at the end of his life from the Museum of Modern Art in New York that enabled him to work on (though not complete) the Merzbarn.

Schwitters was an undistinguished figurative painter until 1917 when, under the experimental influence of the Cubists and Expressionists, he developed what he called his Merz-paintings and poems. The meaningless yet insidiously subversive word “merz” comes from the word “Kommerzbank” which appeared on a scrap of paper he used in a collage. In these works, he wrote in his Merz manifesto, “a perambulator wheel, wire netting, string and cotton are factors having equal rights with paint”.

Just after the first world war, Schwitters's collages and his poem “Anna Blume”, an absurd, phonetic parody of traditional romantic verse which caused great scandal, caught the eye of the Zurich-based Dada movement. The Dadaists were a vociferous crew relishing wild shock tactics in art and life. Schwitters made lively connections across Europe with Dadaists and later with Constructivists (whose architectonic art, which much influenced his Hanover Merzbau, is much cooler and more rational than Dada), promoting their work in his Merz magazines. He travelled widely by rail, invariably fourth-class, laden with suitcases filled both with junk for his collages and with Hanover potatoes and carrots for his meals. His exhibitions and speedy, improvisatory public recitations caused anger, consternation, gales of laughter, and occasionally what he called “a great joy” among his middle-class audiences. “Kurt Merz Schwitters: A Biographical Study” by Gwendolen Webster (University of Wales Press; £40) skilfully gives the full measure of a man whose life was at once uproarious and carefully deliberated.

Dada art and cabaret thrived in the turbulent inflationary Germany of the 1920s. At a time when $1 was worth 25m German marks, Schwitters made a characteristically Merz-like recommendation that his fellow artists use banknotes in their work as they had no money to buy paints and canvas. His painted collages are not overtly political. One rare exception, dating from 1944 or thereabouts, includes the words “The Hitler Gang” in Gothic text. He preferred quotidian debris—tram tickets, bureaucratic forms, dishevelled bird feathers, all sorts of cultural kitsch and schmaltz—which he transfigured with a subtle and daring use of colour into rhythmic, vibrant works of art that speak movingly of their time, yet transcend it.