''Don't misinterpret what I'm saying," cautions one of the protagonists of Omer Fast's video installation Godville, currently showing at the Institute of International Visual Arts (inIVA) in east London. "You won't be able to get the meaning of what I'm saying, 'cos you're too occupied with my words," he says later, adding to the web of confusion already ensnaring viewers. Editing videotapes of human speakers, laboriously slicing and splicing their utterances hundreds of times to form cryptic yet arresting new messages, Fast is very occupied with words. "I'm basically a frustrated writer," he says.

Godville is built from the artist's videotaped interviews with three Virginians who work in a highly specialised sector. Part-time "residents" of the "living museum" Colonial Williamsburg, they spend large chunks of their lives in his- torical dress and "in character", talking and behaving as they understand its 18th- century inhabitants might have done.

Fast's piece intercuts their commentaries on their imagined pasts with their present lives, transforming their words into a complex, ambiguous and anxious reflection on present-day American sensibilities. The installation is further complicated by a double-projection device. A hanging screen carries the speaker's image on one side and images of landscapes and domestic interiors on the other. Some are shot on location at Colonial Williamsburg; others record modern-day scenery in suburban America. Captioned with the speakers' words, these formally beautiful scenes take on odd resonances.

Godville is a bracing journey, and more than worth sticking with for its full running time of 53 minutes (though the installation lets viewers come and go as they please). It demands full concentration, as possible meanings slew this way and that. "The war" might mean Operation Desert Storm, today's Iraq war, or the American war of independence. "Independency" and "occupation" turn inside out and back again: Godville's hybridised personae, in their immaculate costumes, exist both as ex-colonial subjects and citizens of an occupying nation. The potential significance of the word "freedom" oscillates wildly: one of Fast's interviewees (a Baptist preacher in real life) "lives" in Colonial Williamsburg as a slave.

Another role-plays a moneyed housewife. "I only know this little window of what . . . my family and my children tell me . . . what little bit my husband might share with me of the world of politics and business," she admits in a bitter tone, noting that "when you think about it, you feel like you're being property and not human". Time-wise, this comment becomes even more ambiguous when we see her burst into real tears over her three imaginary sons' "deaths" in the war against the British. Working in Godville looks like it entails heavy-duty emotional labour. Fast's editing conjures a sympathetic but fraught and angry persona from his original material. Courtesy of rapid, nervous jump cuts, his subject's yellow gloves are on her hands one second and lie in her lap the next. Her hands flash from one gesture to another in an incoherent yet bizarrely expressive semaphore. Sliding between historical co-ordinates, her discontent cannot be anchored to a concrete cause. How could it be? She is not a "real person" but a (heavily overdetermined) symptom born of collective past and present circumstances.

"The task I set myself is to bridge across, in some cases, the 'split personalities' of the people I interview," says Fast, whose previous projects include Spielberg's List (2003) - a two-screen work built from interviews with residents of Krakow who both served as extras in Schindler's List and lived through the events that film reflects. "I'm interested in finding a way of synthesising a third character who isn't either historical or contemporary . . . in restructuring a voice that speaks to both times."

The mood of that voice is one of extreme anxiety, I point out. Fast agrees, but also says: "I'm not so sure I want to elaborate on the anxiety that characterises our times . . . I'm more interested in finding the 'poetry within the anxiety', to find what resonates within this anxious space, digging that up, and putting it in front of us and making it rhyme."

"Rhyme" it certainly does. Godville is a great riposte to sceptics who don't believe that video art can achieve the depth or repay the repeated viewing that it is generally thought the conventional media support. And despite the work's tension, it is in no way monotonous. Complicatedly paced, its final section builds into a compelling tour de force of visual and aural collage as Fast edits the Baptist preacher's words into a sustained, contradictory, almost delirious invocation of the identity of God: "God is a tool. God is a stone. God is the leaves that are blowing. God is profitable. God is making money. God is considered to be property here. God is against the law" - and so on.

"At the end of the day you know that God is good to have to keep things in perspective," the monologue concludes, as does the whole work. It is a wonder-fully ironic end point, because a steady "perspective" is exactly what Fast's work succeeds in undermining.

Godville runs until 23 October at inIVA, 6-8 Standard Place, Rivington Street, London EC2 (020 7729 9616)