How do you turn 15,000 dollars into 100 million dollars? If you're enterprising Israeli-born film-maker Oren Peli, you write and direct a low-budget supernatural horror movie, shoot it at your own house in your spare time and watch as that modest vision becomes a 21st-century Blair Witch Project.

Paranormal Activity is a phenomenon, scaring the bejeezus out of audiences with its deceptively simple narrative and grainy camerawork, captured by characters as they hunt for an evil spirit in their home.

Various cuts of the film have been screened at festivals around the world, but the version set to terrorise British cinemagoers is a genuinely creepy encounter with things that go bump in the night.

The writer-director cranks up the suspense gradually until we’re almost holding our breath, anticipating the next episode of ghostly interference.

Unlike the recent glut of torture porn thrillers, which slather the screen in blood and entrails, Peli’s film exercises restraint to the heart-stopping finale.

Less is more, and the suggestion of unseen evil in the house is far more unnerving than a blitzkrieg of expensive special-effects – what you can’t see can kill you.

Micah (Micah Sloat) lives in San Diego with his girlfriend Katie (Katie Featherston), who senses a spirit watching over her.

Reluctantly, Katie agrees to let Micah capture evidence of the haunting on his new video camera by setting up a tripod in the bedroom to record everything that happens as they sleep.

Footage of a door opening and closing of its own accord is the first sign that something is terribly wrong in the home.

Micah doesn’t take his role seriously, brazenly goading the spirit (“Is that all you got?”), while Katie desperately tries to prevent him making a bad situation worse.

As the visitations become more intense, Micah invites a psychic (Mark Fredrichs) through the front door, but the visitor leaves quick-smart, sensing that evil has taken root in the house and will stop at nothing until it has consumed Katie.

“You can't run from this, it will follow you,” he professes sombrely.

Paranormal Activity almost lives up to the extraordinary hype from across the Atlantic, effectively tapping into universal fears.

Featherston and Sloat are compelling, the latter grating on our nerves as much as Katie’s as he foolishly introduces a Ouija board to the house then rows with his frazzled girlfriend, cattily telling her to “go hang out with your friend upstairs.”

Physical manifestations of the malevolent spirit start with a light turning on in the middle of the night, or a shadow moving across the bedroom door.

As the film moves into the shocking final act, Peli pulls out all of the stops to have us biting our nails down to the cuticle.

If you thought you were too old to be afraid of the dark, think again.