The Lowland Hundred is the English translation of Cantre'r Gwaelod, the mythical lost kingdom said to lie beneath Cardigan Bay on the west coast of Wales. Though beneath sea level, the lands were protected in ancient times by a great dyke with sluice gates that were opened at low tide to drain the water from the highly fertile land, and closed again as the tide turned. The earliest legend has it that the responsibility for the gates belonged to the maiden Mererid, who allowed the lands to be flooded one night when she was distracted from her duty by the amorous advances of a visiting king. A later version places the watchman at a party in Aberystwyth when the storm blew up, too pissed to close the gates before the sea rushed in, drowning sixteen villages. Those who escaped - the king and some of his court - fled to the Welsh mainland, there to eke out a living as poor farmers for the rest of their days. It's said that if you listen closely on quiet Sunday mornings, you can still hear the village bells ringing out from under the waves.

The Lowland Hundred is also the musical venture of Paul Newland and Tim Noble, who have taken the legend as a metaphor for loss, sense of place and the way that, if we make the effort, we can tune in to a hidden world suggested by, but subtly different to, the real, physical landscape around us - the world of memory and imagination, of a past that is gone and a dream that never was. The album is less a collection of songs than a single musical piece split into seven movements: melodic and lyrical phrases recur as spare, melancholy piano and vocals rise from, then are submerged beneath, a shifting tide of field recordings and treated found sounds that range from the pastoral and evocative to the sinister, disorienting and frankly terrifying. Under Cambrian Sky is described as a concept album about the pair's adopted hometown of Aberystwyth, and so it is; but it's also about different ways of seeing and perceiving, about how the most mundane moments can become magical and mysterious, sometimes whether you like it or not.

'Cambrian Sky,' the opening piece, uses the image of the electric cliff railway that climbs the town's Constitution Hill as a symbol of isolation and transience, the trains constantly passing but never touching, and imagines a lifetime haunted by an image glimpsed, for a moment, through a moving window. Having ridden to the hill's top, we find the Victorian 'Camera Obscura' where, over droning feedback and low, minor chords on the piano, we watch as "children paddle in the Irish Sea" and "Curtains move in Alexandra Hall, Starlings roosting underneath the eaves." Eruptions of distorted but recognisable sounds make the commonplace strange, and 'The Bruised Hill' is made up almost entirely of found sounds - water trickling, gates crashing, birdsong, passing traffic - treated with echo and held together by feedback wails and deep, ominous piano chords. Hauntology has become something of a debased term in music criticism, applied to an increasingly wide spectrum of records and seemingly meaning very different things to different people, but to me this is an example of the form at its purest; conjuring sound-ghosts from the ether and creating a sense of time and place that can only exist in the listener's imagination.

In mapping out their aural psychogeography, The Lowland Hundred are not afraid of silence. It's the blank canvas on which they paint, and much of this record is very quiet indeed, gently lulling you with simple, sorrowful songs that bear comparison with Robert Wyatt or Kevin Ayers, before sudden eruptions of noise tear you from your reverie like an unexploded bomb suddenly going off on a sleepy Welsh hillside. There's something, too, of British Seapower in their sound - or at least, of BSP's more experimental, post-rock side, mournful, expansive and delicate, and also in lyrics about Silurian rock strata, cormorants and kestrels flying overhead. Few other contemporary musical artists have conveyed such a grasp of Britain as a geographical space, as distinct from observations of class differences and social tradition.

"Come and walk with me, high in the ancient wood" runs the chorus of the achingly lovely 'Allt-Glais,' possibly the most conventional song on the album, boasting not only a chorus of sorts, but even something that could be called a guitar solo. It acts as a stomach lining of sorts, before 'The Air Loom': a twelve-and-a-half minute sound collage of knitting, clacking noises, feedback, dull, detuned piano notes, electronic squiggles and all manner of unidentified, sinister noises beneath echoed, choral vocals that bring to mind the latter-day Scott Walker of The Drift and Tilt. For long stretches, very little seems to happen, until a scraping match triggers a vast conflagration; the effect is both mesmerising and nightmarish, appropriate as the song is inspired by the paranoid fantasies of the Welsh-born London tea broker James Tilly Matthews, who was committed to Bedlam in 1797.

Matthews was an important political figure of the time who had attempted to broker a peace deal between Britain and revolutionary France, only to be arrested by the French, jailed for three years, and disowned by the British Government upon his release. When he began loudly accusing Parliament of treason and conspiracy he was sectioned by order of the home secretary, Lord Liverpool, whose statement that he was "a dangerous maniac who should be confined in perpetuity" overruled the official appeals of doctors and family, who claimed that he was both sane and harmless, making Matthews effectively a political prisoner.

Always articulate and obviously intelligent, Matthews' 'madness' manifested itself in his detailed and obsessive conviction that he was the victim of 'The Air Loom Gang' – a group of Jacobin sympathisers, revolutionaries, criminals and spies operating from the London Wall, who had used their talents in 'pneumatic chemistry' to construct the Air Loom, a fiendish device powered by 'spermatic-seminal rays, putrid human breath and the effluvia of dogs,' which Matthews was able to draw in exact and convincing detail, diagrams which incorporated impressively up-to-date scientific knowledge. The Air Loom used magnetic rays to influence his thoughts and to read his mind, and the many tortures it was capable of inducing included 'fluid locking, lobster cracking, stone making, thigh talking, bomb bursting, brain saying…' a list intoned on the album by a submerged voice reminiscent of Blue Jam era Chris Morris. The Lowland Hundred manage to conjure an atmosphere worthy of Iain Sinclair or Alan Moore's From Hell, palpable even without knowledge of the intriguing back story.

If the album begins in the air, it ends beneath the sea, with 'Anemone' in which the sunken village itself is briefly glimpsed, amid dolphins and sea squid. It seems as if we're not only swimming out in Cardigan Bay, but in the deep waters of memory and the unconscious, back almost to the amniotic fluid of the womb. Under Cambrian Sky requires repeated listens to work its wonder; one review I read, when preparing this piece, complained that they just didn't have time to listen to such a quiet album. Give it time though, and what emerges is a sublime combining of melody and musique concrete, of the traditional and the experimental, a collision of careful craft and surrendering to chance. Listen closely, and the songs rise up, like distant bells from beneath the empty sea.