What's green, grubby, slightly vulgar and the one thing every American studio boss would love to get his hands on?

Well, it used to be the almighty dollar... but now it's a swamp-dwelling ogre with romantic leanings and the midas touch.

Shrek - which landed an Academy Award as well as smashing box office records across the globe - set the benchmark for animation when it was released in 2001.

Sharp, sassy and exquisitely rendered using state-of-the-arts computer-generated effects, it stole the cartoon crown off grouchy old pretender Uncle Walt.

Its secret lay in the fact that it applied as much attention to plot and characterisation as it did to the sublime creation of the richly-textured world inhabited by Shrek, Donkey and Princess Fiona.

They're all back in this splendid sequel...and are joined by a new roster of characters destined to join the originals in a gallery of favourites.

Newly-weds Shrek (Myers) and Princess Fiona (Diaz) set off to the Kingdom of Far Far Away to meet the in-laws Queen Lillian (Andrews) and King Harold (Cleese).

However, the last thing mum and dad expected was an ogre, so the king enlists the help of a fairy godmother (Jennifer Saunders) to get rid of his unwanted son-in-law.

Just to make things interesting, the fairy godmother's effete son, Prince Charming (Rupert Everett), is convinced that HE should be married to Princess Fiona.

Any fears that this wouldn't live up to the giddy highs of the original are dispensed in a wonderful opening credit sequence, which runs more spoofs than an entire series of French & Saunders.

(Later there's a wickedly funny skit on the heist scene from Mission: Impossible, with Pinnochio dangled into a prison cell by his strings.)

The fondly irritable relationship between Shrek and Eddie Murphy's donkey is still a constant source of delight, but the introduction of new blood adds a fresh comedy dimension.

It's not often plaudits go to the casting director...but here roles making their first appearance are perfectly filled with actors born to play the parts.

So we have Andrews reprising her Sound of Music governess for the haughty queen; Cleese in finest Fawlty-esque flow for the king; and Everett camply simpering as Prince "because he's worth it" Charming.

However, the cat with the cream is Antonio Banderas in Mask-of-Zorro-mode as Puss in Boots, a sword-bearing moggy who can disarm as easily with saucer eyes as with his finely-honed rapier.

We know it's technically impressive, but some things you can't create on a computer and one of them is fun - which this has in spades.

It's good to see Disney still getting a politically incorrect kicking (especially after their craven refusal to distribute Michael Moore's Fahrenheit 9/11) with constant cartoon digs at the Magic Kingdom.

At the same time, the blend of adult and child-friendly humour remains seamless. (Did you know Pinnochio was a cross-dresser?)

In short, it's pretty much all you'd want in a family movie, and is no self-deceipt to speak the name Shrek in the same breath as Snow White and Dumbo. Yes, it is that good.

Tim Evans