'What I cannot tolerate is personal abuse," says Dame Stella Rimington, fixing me with the piercing green eyes that made Soviet double agent Oleg Gordievsky come over all unnecessary during the cold war.

The former MI5 chief turned spy-thriller writer and Man Booker prize jury chairman who, for the last hour, has been a study in question-deflating diplomacy, is angry. "As somebody interested in literary criticism [her degree from Edinburgh was in English literature], it's pathetic that so-called literary critics are abusing my judges and me. They live in such an insular world they can't stand their domain being intruded upon."

It's hard to understand why she's so cross – surely hissed denunciations, counter-denunciations and deals done behind closed doors during her 40-year career as a spy were ideal training for judging Britain's leading literary prize. And surely the media flaying of Booker judges' credentials is such an annual ritual that no one with a thick skin would be troubled by it.

Rimington is responding to headlines such as: "This year's Booker judges don't inspire confidence" and "Booker prize crisis". The furore started last month when she announced the shortlist of six for the Booker, whose winner will be announced on 18 October. What kind of barbarians, critics fumed, could have omitted Alan Hollinghurst's The Stranger's Child? It was the critics' favourite and, more significantly, William Hill's. What was she thinking of?

"We didn't choose it," shrugs Rimington. "I got called homophobic for not choosing Hollinghurst and Philip Hensher [whose King of the Badgers also didn't make the cut]. I didn't know Hensher was homosexual and if I had, it wouldn't have made any difference."

Rimington was savaged thus by New Statesman's lead fiction reviewer, Leo Robson: "An able and intelligent woman – but you wouldn't ask John Bayley to be a consultant on Spooks. And Rimington's status as a novelist doesn't much help matters. Do we really believe that the author of Secret Asset would have recognised the virtues of, say, Midnight's Children or Life and Times of Michael K or How Late it Was, How Late?"

Rimington retorts: "People weirder than me have chaired the Booker. A previous chair was Michael Portillo." She doesn't mean to suggest Portillo is weird, rather that she is no more or less weird than previous chairs, so doesn't deserve the opprobrium.

Robson does, at least, get to the heart of the alleged Booker crisis. How dare these interlopers into literature's sacred groves judge what is beyond their competence? Rimington, though, argues the competition has different principles. "The aim of the Booker was to appeal to the average intelligent reader and we [the judges] are average intelligent readers." She says she's proud that this year's shortlist is outselling those of previous years.

Twenty-five years ago, Julian Barnes dubbed the Booker "posh bingo". Its judges, he argued, no longer had literary pedigree. In 1972, the judges were Cyril Connolly, George Steiner and Elizabeth Bowen, while in 1987 they included newsreader Trevor McDonald, who was on the panel, sniffed Barnes, "by virtue of having written a biography of Viv Richards". What Barnes would make of the current Booker judges is a vexed question, not least because he's 6/4 favourite to win with his novel The Sense of an Ending. Surely that puts the Booker judges in an invidious position. How could they choose the prize's most damning critic as its winner? "He's got as much chance as the other five," says Rimington. But doesn't the "posh bingo" jibe queer his pitch? "It probably is posh bingo. He's probably right. I wouldn't use that phrase, but it is going to be a bit of a toss-up."

And five red-eyed, contemporary fiction-exhausted people at that. "You have to read 138 books and you read them as you never read novels normally – without pausing to digest them. You'd be lost if you didn't."

Did the experience put her off reading? "I did say I'm not going to read another novel. Then I picked up John Buchan's Greenmantle." It's about, she says, amateur spies in Asia Minor in 1916. In some respects it's similar to the novel that half a century ago instilled in Rimington a romantic dream of what spying might be: Rudyard Kipling's Kim. Its depiction of spies disguised as Pathan tribesmen embroiled in the so-called Great Game of Imperialism, rather than James Bond or George Smiley, was what captivated her.

Perhaps it did so because she was already entranced by India. In 1965, she had sailed there with her husband John where he was to become first secretary (economic) for the British High Commission in New Delhi. She became a diplomat's wife: "It was all coffee mornings and amateur dramatics, until I got the proverbial tap on the shoulder." The tap didn't mean she was entering the Great Game. "I was a part-time clerk-typist, sending documents back to MI5 London. Initially, I didn't know what MI5 was."

When she and John returned to London in 1969, her romantic illusions took a battering. She turned up at MI5 in Curzon Street, as she recalls in her memoir Open Secret, "in a striped Indian silk suit with a mini skirt, and a little hat sitting on top of long hair done up in a bun" – an incongruous outfit for one entering a fetid male milieu of damp raincoats and cold war paranoia. Rimington hasn't yet seen the new film of Le Carré's Tinker, Tailor, Soldier, Spy, but to hear her talk, the film's dismal mise-en-scene nails it perfectly. "Even in 1969, the ethos had not changed very much from the days when a small group of military officers, all male of course and all close colleagues working in great secrecy, pitted their wits against the enemy," she wrote.

The work hardly fulfilled her Kipling-fuelled dreams. There were no espionage adventures up the Khyber. Instead, she worked on a vetting system aimed at excluding communists from work vital to state security. "It was boring stuff. It didn't seem to me very important.

"There were a number of educated women like myself. We ganged up against the tweed-suited, pipe-smoking brigade. In Le Carré-era MI5, there were a lot of Connies [Connie Sachs, the Circus's principal researcher played by Kathy Burke in the film] who never dreamed of developing sources face to face. But that's what I did: I was the first woman on a course to train you how to develop agents or sources." MI5 was hardly sympathetic to women's aspirations. "When I returned to work after having my first daughter in 1971, the men said: 'Why have you come back?' That ethos has gone now." Thanks to her? "Thanks to a whole generation of women inspired by women's lib."

By 1992, after working in counter-espionage, counter-subversion and counter-terrorism, Rimington was appointed MI5's director general. She became not only the first woman in the post, but also the first whose name was publicised on appointment. "I'm proud that I was the first woman DG and that, during the time I was there, MI5 changed from being an old-fashioned closet organisation."

During her reign (until 1996) MI5 refocused from cold war espionage to fighting terrorism. "Not just the IRA, but we were also aware of the growing threat of Islamic terrorism." She has no doubt that MI5 is key to thwarting that threat. "Diplomacy, politics, economics and intelligence must have a bigger role than military answers in defeating terrorism." In her latest novel, Rip Tide, she sends up gung-ho American officials who imagine that al-Qaida can be bombed into submission. "I'm tweaking the Americans' tails," she says. She's tweaked those tails before, charging that MI5 doesn't torture its terror suspects – unlike the US. "MI5 does not do that. Furthermore, it has achieved the opposite effect: there are more and more suicide terrorists finding a greater justification."

But Britain, if her novel is right, is hardly short of home-grown terrorists. In Rip Tide, she envisages a young Muslim man from Birmingham winding up in Somalia with a group of al-Qaida-supporting Arabs running a piracy operation on the Horn of Africa. "I'd read about such a man and wanted to work out how he got there. The only explanation I could produce is that they're influenced by charismatic characters who speak to their historic past and offer them something that seems really glorious." She claims not to have any intelligence-based insight. "I get my stories from the news and feed them into my imagination. The arrests in Birmingham last week show I'm on to something."

Rimington has published five Liz Carlyle novels, each dedicated to a grandchild, and is already on the sixth. She's planning to write the children's book her 12-year-old grandson has demanded. Recently the Daily Mail suggested she was the Katie Price of thriller writers, in that she gets help in writing from the US novelist Andrew Rosenheim. "Andrew does help me, as did [Observer dance critic] Luke Jennings. It's like any skill – you have to learn it, and to do that you have to take advice."

Her post-retirement literary career began in 2001 with her autobiography Open Secret. Disgraced former spy David Shayler at the time attacked her for writing a distorted, anodyne portrait of her career. He wrote that he was jailed for writing about MI5, while she "gets half a million quid advance" for doing the same. For the second time, Rimington gets cross. "He didn't do something similar! He nicked top secret files and didn't submit his manuscript for clearance. I submitted mine for clearance. I'd worked for nearly 40 years at MI5 and I hadn't betrayed my country in the least."

We're sitting in an an office at her publisher Bloomsbury's sumptuous new headquarters. I catch a sidelong glance of Rimington. She's trimly turned out in a tweed jacket and silver loafers. Oleg Gordievsky, in a TV portrait of Rimington called The Spying Dame, disclosed his romantic dream of tearing down the proverbial Iron Curtain between them. "She was a beautiful woman, she had beautiful, deep green eyes. She had curves. Officially speaking, I was a single man and she was a single woman." (Not quite true: she split from John in 1984, but the couple never divorced and remain friends). Perhaps regrettably, Rimington and Gordievsky never became an item. Now 76, her romantic life is not up for discussion, though I do think it's suggestive that in Rip Tide Carlyle is having a no-strings dalliance with a French spook who, handily, is always kept at Eurostar-distance so she can concentrate on the main love of her life, work.

But Liz is not Stella. Why did she make Liz childless? " I thought she'd have greater flexibility as a character." But surely a childcare-juggling spook would be fertile drama akin to her own life? Rimington once related a story of turning up to a meeting at a safe house with a would-be defector and had to borrow money off him to dash to hospital to visit her sick daughter. She shakes her head: "I was only certain that she had to be a woman."

Rimington's fiction is never going to win the Booker: her latest is a serviceable thriller with wooden dialogue and pasteboard characters. Wouldn't she like to write something more substantial that would win Britain's leading literary prize? "No! I'm much happier writing light thriller fiction. I've absolutely no aspirations to win the Booker at all."