The problem isn’t that Little Britain has suddenly become unfunny, but that it’s too popular. It was cool to like it when it was an acquired taste, when its dark comedy was new. But by season three, the masses have joined in (yeugh), viewing figures are in the millions, David Walliams and Matt Lucas are having a great time being stars; time to cut this poppy down to size.

But it’s still funny, the comedy as finely observed as in the first season, its sly subversion enshrined in the opening credits sequence. “Britain, Britain, what a bloody lovely place to live,” heralds Tom Baker in his OTT introduction, as the camera pans to the show’s standing characters, including the delinquent Vicky Pollard with a gaggle of real-life young imitators, and Daffyd, the only gay in the village. “What makes Britain fandabbadozy?” asks Baker. “It’s the great British public.”

And that’s the joke LB has never deviated from: the characters are a gross lot and yet we recognise them with shame and a perverse pride because they’re “British” at their roots. The new characters include a Thai bride and Sir Norman Fry, a Major-era MP, confessing to sexual indiscretions while his adoring wife looks on. The show also has the true mark of a great sitcom: how many catchphrases it launches into national parlance — “I’m a lady”, “yeahbutnobutyeahbut”.

Little Britain takes on British foibles and stereotypes and colours them in with a highlighter: Bubbles de Vere, Matt Lucas’s fat, society lady living on a fat farm, is the embodiment of the idle rich; Andy, the wheelchair guy who can really walk, and Lou, his unwitting carer, the ultimate perversion of benefits culture. While mad, bad or sad, their eccentricity and shamelessness are so winning.

Vicky Pollard is the last word in scumbag teenagers, Carol, the bankteller whose “computer says no” (in the new season she’s been transferred to a travel agents), an example of unhelpful British service culture at its worst. The trannies, Florence and Emily, are funny not because their drag is so Victorian and language so flowery but because their masculine natures always break through in a mannish burp or gruff aside.Subtly, Walliams and Lucas are moving the comedy along. The Prime Minister, played by Anthony Head, now recognises Sebastian’s crush on him. In their first encounter in the new season, he asks the obsessed civil servant to destroy a file pertaining to an arms deal with Iran. “You lied. I thought you were perfect,” says Sebastian, devastated, and for a moment we don’t laugh, because his disillusion with his idol is painfully clear. Of course, in a moment that’s gone: Sebastian agrees to shred the file on condition that the PM strips to a leather thong and cleans the office with a feather duster. For the first time, the Fat Fighters rise up against their tyrannical leader Marjorie Dawes (though she crushes them soon enough). Daffyd is still the only gay in the village, but in an oddly muted sketch, cannot deal with the sex aspect of becoming a rent boy. “I thought we’d start by going for a tea and a scone,” he tells his first customer.

Little Britain is like one long drag show; camp as camp is supposed to be: threatening, slightly nasty and frayed at the edges as in The League of Gentlemen, which foreshadowed, and laid the path, for LB — rather than the Larry Grayson kind of flouncery. And British comedy, like drag, is never better than when celebrating grotesques. The lineage of Daffyd, Marjorie Dawes and the other LB mainstays is in The Good Life’s Margot, Ab Fab’s Edina, Alf Garnett and Basil Fawlty.

We have an affection for these characters but also a fear and revulsion. Little Britain is a seaside postcard featuring seagull poo rather than sandy beaches; Britain as we prefer not to know it, while secretly delighting in its perversions and extremes.