Modern meets ancient at the great Celtic family gathering, where Ireland is the special guest this year, reports Lara Marlowe from the InterCeltique festival in Lorient, Brittany

Darragh Kiely, a dancer with the St Colman's pipe band, described the ambience moments before the Great Parade of Celtic Nations started in Lorient yesterday morning with one word: "Mighty".

Four thousand musicians, dancers and costumed marchers were lined up behind Kiely and the band's leader, Pat McCarthy. For three hours, the two Irishmen took turns carrying a huge Irish Tricolour through the streets of this Breton port town.

Ireland is the guest of honour at this year's Festival InterCeltique de l'Orient, and McCarthy is participating for the third time. "It's absolutely fantastic; it's a buzz for 10 days," he said. By the time the festival ends on August 14th, 600,000 people will have visited Lorient, usual population 60,000.

"Colourful" is inadequate to describe the kilts, taffeta skirts, shawls and dancing shoes, wooden clogs, white lace coiffes, embroidered aprons and snow-white goose down.

The Irish dancers of the Cibeal troupe received some of the loudest applause. "The Irish are the ones we love most. They're our closest, favourite cousins," said Charles Huard, a retired naval officer and one of the parade's organisers.

"They go mad for the dancers," said Máire Ní Neachtáin, the deputy head of the 250-strong Irish delegation. "The more ringlets in the hair and the more embroidery on the dress the better."

Up to 100,000 people braved damp Celtic weather to crowd 10-deep along the streets for the show. The pipers played their high, mournful strains, accompanied by Breton bombardes (an ancestor of the oboe), bodhráns and even - a modern innovation -brass instruments.

"I am absolutely gobsmacked," said Liam Ó Maolaodha, a director of Oireachtas na Gaelige who brought Ireland's "The happiest country in the world" art exhibition to Lorient for the festival. "There's nothing on this scale in Ireland . . . the ploughing championship, the Fleadh, who claim 250,000. If our esteemed Minister, Mr O'Donoghue, saw this, we'd do something like it!"

French newspapers describe Ireland as "the beacon of Celtic culture" and "the ancestral repository of Celtic memory". Anne Anderson, Ireland's new ambassador to France, is treated like royalty in Lorient. Every time she ventures out of her hotel, she's mobbed by Bretons wanting to shake her hand.

Festival director Jean-Pierre Pichard has spoken of the "joyous family" of Celtic people. "You cannot be here and not have that sense of family," says Ms Anderson. She is conscious of the way other Celts, especially the Bretons, look to Ireland for inspiration. It is because of "the richness of what we've contributed historically, and because we are that part of the Celtic family that has achieved sovereignty", she explains.

With its "Celtic village" selling crockery, T-shirts and trinkets, and "Celti-bars", one may rightfully wonder what "Celtic" in these instances has to do with the pre-Roman, pre-Germanic inhabitants of Europe.

"There's a lot of kitsch and tackiness around," admits Éamonn Ó Catháin, the Irish TV chef and radio commentator who is the official cook for the Irish delegation.

Yet Ó Catháin is a Celt to the core. "The Youghal pipe band walked into the Irish pavilion last night, and it made my Celtic blood rush," he says. "It was fabulous - the drums - almost like being a Protestant on the 12th of July. They started playing Breton tunes, sharing the tradition of the pipes. It was very, very exciting. The festival is worth it if just for that - guests embracing the host's traditions."

Philip Cummings, a poet from Belfast who writes in Irish, French and English, was one of the few artists from the North in the Irish delegation. "The words 'Celt' and 'Celtic' are some of the most overused in the English language," Cummings says. "They're often used in a facile, commercial way."

In art, literature and gastronomy, pretensions to some sort of pan-Celtic identity are tenuous. But the musicians - the real stars of the Lorient festival - have no doubt about their origins. "I definitely feel Celtic," says Colm Delaney, a concertina player with the newly formed "contemporary trad" group Díorma. "It's everything I do: music, song, dance, the Irish language. Without the Celts we would be cultureless."

Ambassador Anderson described what "Celtic" means to her. "It's about shared roots, shared history," she said. "Most of the history of Celtic people is one of oppression and difficulty. They have lived through tough times and kept their distinctiveness. They're survivors in the face of adversity, and they maintained a sense of joy."

There are 106 Breton towns twinned with Irish towns: Lorient is paired with Galway. The Breton pride so evident here is a recent phenomenon, achieved in the three decades since the festival started. "For a long time, the Bretons were locked into an inferiority complex about being Breton," says Pichard.

The festival opened on Friday night in the fish market in the port, with a meal for 1,500 people, called a cotriade. Luc Offredo, a France Télécom technician, told me his parents did not want to learn Breton songs or dances because they were ashamed. "The revival started in the 1970s. Grandparents taught their grandchildren. If we're so attached to our culture today, it's because France tried to deprive us of it. I feel French and European, but I resent their having tried to take it away from us."

The most urgent question facing Celtic musicians, both Breton and Irish, is the quarrel between ancients and moderns. At Lorient, you sometimes find both sensibilities within a single group or musician. Yann Tiersen, the Breton composer who wrote the music for Amélie and Good-bye Lenin - and who recently played at the Galway festival - played lilting melodies on the accordion, then sci-fi music on an electric fiddle.

At the Grande Nuit de l'Irlande on Saturday, some of Ireland's most accomplished traditional musicians delivered technically perfect, if somewhat dull performances.

I rushed across town for the "Celtic rock" concert and Kíla, described by Ó Catháin as "like punks on speed". Emer and Róisín Maoilearca, sisters from Co Mayo, are volunteer festival organisers and Kíla fans who told me the group brought them to traditional music.

It might help to be in your 20s. After having my ear-drums blasted, I retreated to the Irish pavilion, where Slí struck the perfect balance between tradition and modernity.