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In 1961 he played one of the key roles in his career, Fast Eddie Felson, the rebel pool-player hero of Robert Rossen’s The Hustler. The character had all the characteristics of Newman’s star persona — the irreverence, the obtrusive cool, the sheer gall that made him an idol for a disaffected younger generation, but also embodying its vulnerability, in spite of its apparent freedom of action. Two years later in Hud, he played the ne’er-do-well son of the new cattle country baron who gets his way with his family mainly on his insolent charm, and wins the sympathy of audiences even while kicking everyone else in the teeth.

In the mid-1960s he had another big success, as the eponymous sub-Chandler private eye in Harper, but in Alfred Hitchcock’s patchy spy thriller Torn Curtain (1966) his search for psychological truth seemed to sort ill with Hitchcock’s primarily mechanistic view of the world his characters inhabit.

Then came Cool Hand Luke and the decade ended in fine style with one of the most commercially and critically successful of all his films, George Roy Hill’s Butch Cassidy and the Sundance Kid (1969), which created a great new double act with Robert Redford in a nicely irreverent half-comic western. He had already made his directing debut with Rachel, Rachel (1968), starring Joanne Woodward in an unexpectedly gentle study of a spinster schoolteacher nearing desperation. Although hardly the sort of film audiences associated with Newman the actor (he did not appear in it himself), it was carried off with great skill and conviction.

The 1970s brought a change of image for Newman, taking him away from his insolent rebel roles and — at his own choice — more in the direction of character acting. Two of his most interesting films at this time, both directed by John Huston, The Life and Times of Judge Roy Bean (1972) and The Mackintosh Man (1973), failed to achieve the popularity they deserved. But a new teaming with Robert Redford as Chicago conmen in The Sting (1973) brought them both a big hit, with the likeable exuberance of its two irrepressible protagonists.

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Of all the actors now at work in Hollywood he is the only one to mark every film he is in decisively with his own personality

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His third film as a director, The Effect of Gamma Rays on Man-in-the Moon Marigolds (the second, Sometimes a Great Notion, was taken over from another director, and did not satisfy him) contained another superb performance from Woodward and demonstrated if anything an increase in Newman’s finesse and directorial control.

Unfortunately, perhaps, Newman chose not to develop this talent much further. He directed three more films, all of them starring Woodward, but in only one of them, Harry and Son (1984), did he appear himself. All were praised for their direction of actors and their straightforwardly convincing realism; none received much public notice, though the last of them, the third screen adaptation of Tennessee Williams’s The Glass Menagerie (1987), was generally accounted the best version, with Woodward particularly impressive in the role previously played by Gertrude Lawrence and Katharine Hepburn.

After The Sting and his next film, The Towering Inferno (1974), a superior disaster movie which saw nearly a dozen stars variously involved in a flaming skyscraper (and being killed off in reverse billing order), Newman was at the peak of his career. As he progressed through his fifties, he continued to develop as a character player. While he continued to make relatively uncomplicated star vehicles such as The Drowning Pool and Slap Shot, where he played such traditional iconic roles as a detective or a sportsman, he also, always a knowing selector of directorial potential, began to work with such emergent talents as Robert Altman, in Buffalo Bill and the Indians (1976) and Quintet (1979), and the Merchant/Ivory team, in Mr and Mrs Bridge. But among the best of his later performances was the alcoholic lawyer in Sidney Lumet’s The Verdict (1982).

As time went on he had the good sense to work with, and sometimes play second fiddle to, the new generation of stars. In Martin Scorsese’s The Color of Money (1986), supporting Tom Cruise, he reprised his character Fast Eddie Felson from The Hustler and after several near misses he finally won an Oscar. In Sam Mendes’s gangster drama, Road to Perdition (2002), he played a Chicago gang boss to Tom Hanks’s hitman and was Oscar nominated yet again. He was then 77 and it was his final film role. Few Hollywood superstars coped with advancing years so gracefully, and perhaps none managed to remain, according to his female fans at least, so irresistibly sexy.

In 2003 he was back on the Broadway stage in a revival of Wilder’s Our Town, this time in Frank Sinatra’s role of the stage manager, but he announced his retirement from acting four years later. Away from screen and stage Newman launched a range of food products, Newman’s Own, including salad dressing, pasta sauce, lemonade and popcorn, donating all the profits to charity. One of his pet projects was a summer camp for seriously ill children. He was also a motorsport enthusiast who successfully competed in races until he was well past 70. A liberal in politics, he was a prominent supporter of the Democratic Party, and in 1978 was appointed by President Jimmy Carter as a US delegate to the UN Conference on Nuclear Disarmament.

Paul Newman’s career was symptomatic of an important change of emphasis in Hollywood during the later 1950s and 1960s. He developed from a star on a traditional model — though a particularly compelling one — into an actor of stature, an astute businessman and a director of considerable talent — an all-round creator in a cinema which required its idols to fend for themselves, create and control their own image without the assistance of a paternalistic studio. That he managed this so well was a tribute to his force of personality, but also to qualities which marked him as a specifically modern figure in an American film industry otherwise living too much, too blindly, on the relics of a vanished past.

He is survived by Joanne Woodward, and their three daughters, as well as by two children of his first marriage to Jackie Witte (1949-58). His son with Witte, Scott Newman, an actor, died from an accidental drug overdose in 1978.

Paul Newman, actor, producer and director, was born on January 26, 1925. He died of cancer on September 26, 2008, aged 83.