One of the most significant British playwrights of the late 1950s and early 60s, John Arden, who has died aged 81, was in later life an almost forgotten theatrical figure. However, a revival of his early classic Serjeant Musgrave’s Dance, by the Oxford Stage Company in 2003, was a stunning reminder of his rich talent for theatrical poetry and political metaphor. The play told of four Victorian army deserters arriving in a northern mining town to exact retribution for an act of colonial violence. Arden had been prompted by an incident in Cyprus in 1958, when British soldiers killed five innocent people in an anti-terrorist reprisal. Its time had come again as public concern grew over the war in Iraq - to which Arden was unflinchingly opposed - and the terms of the British involvement. The revival made most new drama seem puny and self-indulgent in comparison.

From 1957, when he married the actor and writer Margaretta D’Arcy, Arden was both politically engaged and theatrically radical. His plays constantly invoke legend, historical precedent and the politics of colonialism in Ireland and Scotland, and employ a full panoply of verse forms, music, vaudeville, the satire of Ben Jonson and soapbox oratory. The result is the sort of heady dramatic brew that other 1950s theatrical figures such as the director Joan Littlewood and the writer Brendan Behan were seeking. Arden is one of the very few 20th-century dramatists you could mention in the same breath as Shakespeare, Molière and Brecht without the parallels sounding too far-fetched.

Like those three giants, Arden saw himself in his early life as a man of the theatre, not a literary figure, though he eventually turned to writing short stories and long, baggy novels: his first, Silence Among the Weapons, was shortlisted for the Booker prize in 1982. He became disillusioned with the ascendancy of the director and scenic designer over the writer and the actor, a position brought into sharp focus in his and D’Arcy’s dispute with the Royal Shakespeare Company at the Aldwych theatre in 1972, when they picketed the audience at their own play, The Island of the Mighty, a mythic monster of a piece about the Arthurian legends, which they felt was being slanted by David Jones’s production in favour of imperialism.

The dispute triggered a debate about the rights of a playwright in a collaborative art form and led eventually to the formation, in 1976, of the Theatre Writers’ Union. Arden and D’Arcy, who had settled with their family in Galway in 1971, became fully embroiled in the fringe theatre scene: The Ballygombeen Bequest (1972) was a freewheeling Brechtian parable of sickness, colonialism and capitalism in Ireland that was halted by a libel suit and rewritten as The Little Gray Home in the West (1978); The Non-Stop Connolly Show (1975), “a dramatic cycle of continuous struggle in six parts” pinned to the momentous life of the Irish trade unionist and nationalist James Connolly, lasted for 26 hours at its first performance in Dublin; and Vandaleur’s Folly (1978) recounted the setting up of an agricultural commune in the west of Ireland in 1831 and the stark “melodrama” of its catastrophic failure.

A trained architect, well-read Marxist intellectual and astute art historian, Arden was a rare bird in a theatre scene populated with many equally committed but less gifted colleagues. His dark-haired bohemian good looks mellowed into a leonine countenance with a fine mane of white hair and an imposing pair of horn-rimmed spectacles. He had the confidence of his convictions and the healthy arrogance of any self-respecting Yorkshireman.

Arden was born in Barnsley, the son of the manager of a glass factory. At Sedbergh school, Cumbria, he took English, French and German for higher school certificate, played Hamlet, and wrote “parts” of five plays, before completing his national service in 1950 as a lance corporal in the intelligence corps. He studied architecture at King’s College, Cambridge, and qualified as an architect in 1955 at the Edinburgh College of Art, where a student theatre group performed his first play, All Fall Down, a comedy about building a Victorian railway.

He wrote plays while working in an architects’ office in London until George Devine, who had launched the English Stage Company at the Royal Court in 1956, accepted The Waters of Babylon for one Sunday night “production without decor” in 1957. Robert Stephens and Phyllida Law were in the cast of a fantastical comedy about slum landlords, asylum seekers, national lotteries and sex scandals. The Court had found its next new voice after John Osborne, soon joined by Ann Jellicoe, N. F. Simpson and Arnold Wesker.

All three of Arden’s Royal Court plays were critical and box-office failures. Live Like Pigs (1958), a welfare state comedy, interspersed with raucous songs, about a group of wanderers settling in a council house, played to quarter-full houses. Serjeant Musgrave’s Dance (1959), “another frightful ordeal,” wrote Sunday Times critic Harold Hobson, did even worse (21% houses). This Happy Haven (1960, his first collaboration with D’Arcy) was a prescient satire of extended life in an old people’s home - William Gaskill’s production had young actors wearing “old” masks - and barely attracted any audience at all (12%).

But rarely has the Court’s “right to fail” catchphrase been more resoundingly justified than in Arden’s case. Although the theatre rejected his next play, The Workhouse Donkey, his reputation ensured a production by Stuart Burge for the fledgling National Theatre at the Chichester Festival theatre in 1963. It was a kaleidoscopic epic of municipal shenanigans, centred on a Labourite Napoleon of the north’s attempt to resist his ejection after years of struggle. Michael Billington acclaimed it as Arden’s “masterpiece”, showing that “it was after all possible to unite passion, poetry, sex and song in a living theatrical form”.

The National presented Arden’s next play, Armstrong’s Last Goodnight (1964), after the premiere in Glasgow in a production by John Dexter and Gaskill that pitted Albert Finney as a 16th-century feudal chief on the Scottish border against Stephens as the king’s diplomat, Lindsay of the Mount. It was a dazzling piece written in ersatz Scots dialect - “a theatrical speech thorny with images, knotted with strength, rough and springy as an uncombed fleece,” said Ronald Bryden - but with too few concessions, some thought, to comprehensibility.

Although his work with D’Arcy was prolific, their joint efforts never attained the mastery of the early plays. They wrote many pieces for radio and for children. Arden alone published a volume of short stories, The Stealing Steps (2003), and his collection of essays, To Present the Pretence (1977), is a treasure trove of lucid commentary on the theatre of his time, as well as politics, war and writers he admired, including Lorca, O’Casey and Brecht.