Above the "blue city" of Jodhpur sits an extraordinary building: a vast, sprawling pile, topped by cupolas, with a dome more than 100ft high. Size alone would set the Umaid Bhawan apart. One of the biggest "houses" in the world, it dwarfs the indigo-painted Brahmins' homes in the city below (and proved both fancy and capacious enough to house the swanky guests at Liz Hurley's protracted Indian-style wedding celebrations earlier this year).

But it's also an architectural oddity: an Art Deco palace built by an Englishman for an Indian prince, completed in 1944, just in time to see the end of both British and princely rule in India.

It is magnificent, sometimes beautiful, especially in the evening when the setting sun turns its biscuit-coloured sandstone a soft pink. But it's also totally over the top, and if at times it seems like a cross between the ancient Hindu temples at Angkor and an especially grand British town hall, well, small wonder. For this palace could be described as a late love-child of Britain's encounter with the East: Angkor Wat was the inspiration, but the architect commissioned by His Highness Umaid Singh, Maharajah of Jodhpur, was Henry Vaughan Lanchester, renowned for building splendid civic edifices everywhere from Hackney to Madras.

Inside, the palace is even more of a cultural cocktail. The Maharani's suite wouldn't be out of place on a Thirties ocean liner; designed by Heal's, the furniture had to be remade locally when the entire shipment was sunk by a U-boat. The state rooms have murals of Indian epics painted by refugee Polish artist Stefan Norblin in Art Deco style.

Throughout, Hindu motifs are deftly reworked into the geometric designs so fashionable in the Thirties, while in the zenana (or purdah) wing, Lanchester gave the court's women fine views, both from the terrace and from the purdah screens which looked on to the daily ceremonials of court. And amidst the palace's long, cool corridors, lined with more than a million square feet of marble, there are two tiny footprints at each entrance ­ to guide Lakshmi, goddess of wealth and wisdom, into the Maharajah's home.

It's an unlikely mix of East and West, ancient and modern. But so was the regime that produced it. Today, if we think of it at all, we think of the British Empire as monolithic: a third of the world a uniform pink. But in India, the Empire was more complex. Just over half of the subcontinent was "British India"; the rest was made up of princely states ­ semi-independent kingdoms ruled by local dynasts (often bearing exotic titles such as the Wali of Swat).

Some were barely more than a hillfort or two; but the largest, Hyderabad, was roughly the size of Great Britain, its ruling Nizam the richest man in the world. And although there was always the Viceroy in Delhi or, closer to hand, a British "Resident" to ensure the Indian princes toed the Empire line, if you'd asked who ruled them, the people of Jodhpur would have said, "Our Maharajah, of course", rather than the British.

It was an unlikely system, this patchwork of Indian Ruritanias, but it seemed to work. The princes kept a wide degree of autonomy.And they injected glamour into the workaday business of Empire, whether exotically costumed in silks and pearls for ceremonial "durbars" in New Delhi or playing polo anywhere from Jaipur to Blighty ­ where Sir Pratap Singh, Regent of Jodhpur and a particular favourite of Victoria, made famous the riding breeches that still bear the city's name.

Later it became fashionable to write off the ruling princes as picturesque puppets. But the princely states could both symbolise India's past and offer visions of India's future. Enlightened princes founded universities, nurtured trade and industry, and initiated India's first experiments with representative government. Apart from building his Art Deco palace, Umaid's big enthusiasm was flying.

Thus Jodhpur gained India's first international airport, used by the KLM services to India and beyond in the Thirties, and then as an Anglo-American military base during the Second World War. It gives a sense of the scale of Umaid Bhawan and the wealth of the princes that after the war was won, the Maharajah invited pretty well the entire base ­ several thousand men ­ for a slap-up meal in the magnificent state rooms.

But the world the palace represented was changing. First, the old Maharajah died. Then as Britain prepared to quit India, his successor was forced to choose accession either to Pakistan or India ­ a bitter pill sugared by constitutional commitments to maintain the princes' titles and Privy Purse incomes in return for the surrender of their powers. Thus ancient dynasties, most older than the House of Windsor, willingly subsumed themselves into the newly independent India. The continuing bond between the Maharajah and his erstwhile subjects was highlighted when the Maharajah stood for the state assembly and won by a landslide, only to die in a plane crash.

So it fell to his widow and young heir, the current Maharajah, HH Gajh Singh II, to deal with the turmoil when, under Indira Gandhi, those promises to the princes were broken. It was, he recalls, "a betrayal". The pretext was "war on poverty", the motive nakedly political, as Mrs Gandhi objected to the princes' independence and enduring popularity.

As one former ruler pointed out, "I did not for one moment believe or accept that [this] would materially affect the poverty line, because ten times that amount was being lost in bad management, embezzlement and bad procurement." India's poor got no richer, while the papers were filled with stories of palaces sold, collections dispersed and fine buildings left to crumble. But while some former ruling families went to the wall, others have changed with the times. Princes have become diplomats, generals, businessmen ­ or hoteliers, to keep their palaces intact.

Maharajah Gajh Singh is a case in point. His family continue to live in some splendour in the former zenana wing, but the rest of Umaid Bhawan now functions as a hotel, leased by the Taj group. Just as "a building like this needs people to stay alive", so Singh has reinvented himself as an ambassador, a promoter of tourism to Rajasthan and a protector of India's ancient monuments.

The ruling family's website describes the Maharajah's "journey into manhood as one of India's midnight's children, the transition from Kingship to Trusteeship of an unparalleled heritage, and from Maharajah at four to a productively involved and beloved democrat... An absorbing adventure that may well have daunted his warrior ancestors". But in fact there's still something distinctly king-like about the Maharajah. Every year for his birthday durbar, the Maharajah's palace fills with his leading subjects and kinsmen, seated in an intricate arrangement designed to express the complicated patterns of kinship and feudal duty.

It's an extraordinary scene — and one that has attracted the attention not just of the hotel guests looking down from the rotunda above, but of sociologist Marzia Balzani, who devoted a chapter to this event in a recent academic tome. Her thesis? That the court of Jodhpur illustrates the countless ways in which the tradition of kingship has survived British rule and "de-recognition" — even if these days the hotel guests, Liz and Elton et al, get to share Lanchester's Art Deco palace with the Maharajah.

To stay at the Umaid Bhawan, visit www.tajhotels.com.

James Collard travelled with Greaves Travel (0870 8502497; www.greavesindia.com), specialists in bespoke tours of India, who offer four nights at Jodhpur with overnight stays at Mumbai and BA flights, from £1,414, with transfers, based on two sharing

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