For 25 years the Rev Jerry Falwell was the bogeyman of American liberalism; the spectre of cash-grabbing televangelism and Christian McCarthyism. To others, though, he signalled a new dawn for the decent, proud American disenfranchised by secularism and humbled by Vietnam.

The founding of Moral Majority Inc in 1979 tied together biblical and political ultraconservatives. It presaged the triumph of the new Right, which saw the legacy of Jimmy Carter — greater power for women, blacks and Hispanics; environmental legislation, the recognition of communist China and the SALT II arms treaties — as belittling and irrelevant to America’s interests. Moral Majority was a politicisation of Falwell’s enormously wealthy ministries and television show, The Old Time Gospel Hour, networked at prime time on 681 stations. From this zenith he gradually slipped into massive debt, astonishing alliances, paranoia and crankish proclamations.

Falwell was born in Lynchburg, Virginia, the grandson of a Prohibition bootlegger and the son of an alcoholic businessman who ran a dance hall and a transport business. He was said to have turned to drink after shooting dead his own brother and died of cirrhosis of the liver when Falwell was 15.

Falwell was “born again” while listening to Dr Charles Fuller at Lynchburg College. He transferred to the Baptist Bible College in Springfield, Missouri, to complete his education.

He returned to Lynchburg and established a church in the former Donald Duck toy factory. With gimmicks such as Christian karate experts and ventriloquists, the church soon had one third of the town — 20,000 people — as members. Falwell took his sermons to radio, then local television. His Old Time Gospel Hour was a great success, and began to be syndicated across the Southern Baptist heartlands. In his sermons he exhorted all to be “pro-life, pro-family, pro-moral and pro-America” and then urged viewers to help to build God’s church. By 1980 he had 21 million regular viewers and about $45 million a year.

With the church’s money he set up Lynchburg Baptist College in 1971, then Liberty University. These compounds were filled with clean-cut youngsters in suits, petticoats and dresses. Falwell’s institutions became the main business of Lynchburg and soon his money-making ventures included mail order Jesus Christ jewellery and alliances with preachers such as the Rev Robert Schuller, who ran a “Shopping Centre for Christ” next to Disneyland.

The Moral Majority had four million Americans on its mailing list, and Falwell was said to keep a staff of 800 to count his flock’s tax-free contributions. Hundreds of Democrats questioned why he was being allowed to mobilise politically a massive following against them, in defiance of the constitutional separation of Church and State. But as the cult of Americanism took hold, Falwell, along with Jim Bakker and Jimmy Swaggart, rode the crest of religious revivalism and seemed untouchable.

Moral Majority began its work with the Equal Rights Amendment. Falwell did his best to infuriate its advocates: “I listen to feminists and all these radical gals . . . These women just need a man in the house. That’s all they need. Most of the feminists need a man to tell them what time of day it is and to lead them home. And they blew it.” Once Ronald Reagan was in power, Falwell had the ear of Paul Laxalt in the Senate, who in return sponsored his Family Protection Act. This would legalise discrimination against homosexuals in the workplace, make it the law for doctors to tell parents if their children requested contraception or abortion and ban state-funded lawyers from taking on desegregation cases. In California, one cell managed to force into law the provision that every doctor must report to the police the sexual activity of a teenager under 18. Many of the state’s doctors risked jail by openly stating their noncompliance.

Yet Falwell’s attempt to establish a broad church of moralists was doomed by his tendency to embrace and then alienate. He claimed Moral Majority was political, not theological, which made no sense to the 72,000 clergymen he had enrolled. He claimed to have repented from his segregationism, yet he railed against welfare recipients (disproportionately black), saying they should be left to starve. While MMI was avowedly bipartisan, he claimed that Democrats were “a dangerous minority of homosexuals, feminists, socialists and freezeniks”. He said that anyone who was anti-Israel was anti-God, but later added that the Antichrist was Jewish and that Jews, like Roman Catholics, had no place in Heaven.

Sections of his movement became either silly or sinister: the Indiana branch sought a state law to allow parents to beat their children without restraint. In Maryland they lobbied for a “pornographic cookie control act” after one baker produced a line in anatomically correct gingerbread men. Moral Majority spent $3 million on a campaign telling heterosexuals in San Francisco to turn against the gays who had made a Gomorrah of their city.

Yet Falwell was witty and level-headed in heated discussion and an expert in reading an audience. He toured Ivy League universities, where hostile crowds were soon laughing and listening. In 1985 he went to Oxford to debate Western nuclear policy with David Lange, the New Zealand Prime Minister. Expected to lose his nerve and suffer a complete humiliation, Falwell put on an impressive show, never responded to gibes and lost the debate by a narrow margin. Conservatives voted Falwell second only to Reagan as the most admired man in America.

It was left to the religious demagogues to destroy each other. In March 1987 Bakker, leader of the television ministry PTL (meaning Praise The Lord or Pass The Loot, depending on one’s viewpoint), fell from grace in a sex and hush-money scandal. Bakker passed his ministry to Falwell, who was rumoured to have been involved in the conviction, and thousands suspected foul play. Swaggart, who was earlier accused by Bakker of leading a “diabolical plot” to take over his empire, chastised his jailed colleague for not taking responsibility for his sins. When Falwell warned Swaggart off, Swaggart replied that of $3.2 million raised by Falwell for famine relief in Sudan, all but $300,000 had been misappropriated. Soon, Swaggart was in tearful ruin as his liaisons with prostitutes were uncovered, but there was little for Falwell to smile about. PTL fell into bankruptcy, and many accused Falwell of scuttling it and stabbing Bakker in the back. Televangelism was dead.

Moral Majority fell with the preachers. From raising $14 million in 1985, it took just $3.5 million in 1988 and disbanded a year later. Falwell's university was now $110 million in debt. To compound his ill fortune, the pornographer Larry Flint, who had been found guilty of causing Falwell emotional distress by running a joke advertisement that insulted Falwell, won his appeal and took back his damages. It was ruled that Falwell had put himself so far forward that he could not reasonably claim to be libelled.

Falwell retreated for a while, but in 1995 he announced that two Virginia businessmen, acting for the Christian Heritage Foundation, had bailed out his university. This foundation appeared to be a front, with a paper trail leading back to the Rev Sun Myung Moon.

It was unclear how much money Falwell had accepted, but he was known to have asked Reagan to forgive Moon’s tax evasion. Even those who denied that Falwell served mammon first wondered why, after so much brimstone, he was being photographed embracing a man who claimed to be the Messiah and the moral superior of Jesus.

Nevertheless, the rise of George W. Bush could have brought a resurgence for Falwell — the mix of jingoism and religious fervour after the 9/11 attacks was the climate in which he thrived. He set up the Faith and Values Coalition with plans to promote an “evangelical revolution”. He knew that those who saw the United Nations as an irrelevant obstacle to US foreign policy had much in common with those who believed, as he did, that it was the herald of the Antichrist’s one-world rule.

Yet he exasperated America in a radio interview in which he said: “I really believe that the pagans, and the abortionists, and the feminists, and the gays and the lesbians . . . People for the American Way — all of them who have tried to secularise America — I point the finger in their face and say, ‘You helped this happen’.” In an interview on September 30, 2002, for 60 Minutes, Falwell said: “I think Muhammad was a terrorist. I read enough by both Muslims and non-Muslims, [to decide] that he was a violent man, a man of war.” The Iranian Foreign Minister, Kamal Kharrazi, condemned the remarks as an incitement to conflict, while the spokesman for the Ayatollah Ali Khameini issued a fatwa. Falwell apologised and back-pedalled on both these statements, but he had become a foot-in-mouth Elmer Gantry, for once out of touch with Middle America.

Over the past two years Falwell had repeated attacks of pneumonia. He is survived by his wife, Macel, and three children.

The Rev Jerry Falwell, preacher, televangelist and lobbyist, was born on August 11, 1933. He was found dead on May 15, 2007, aged 73