According to Variety, David Lynch is making a new movie with StudioCanal. In fact, he's already been shooting it under the radar for two years.

Titled "INLAND EMPIRE" (in capitals, though Lynch doesn't explain why), it stars Laura Dern, along with Justin Theroux, Harry Dean Stanton, Jeremy Irons and a host of others Lynch won't specify.

"It's about a woman in trouble, and it's a mystery, and that's about all I want to say about it," he comments diffidently.

The title refers to the bleak residential area on the edge of the desert near L.A. -- the antithesis of the tony locale of his last movie "Mulholland Drive."

Lynch has shot much of his latest film in Poland with local actors, after making friends with the organizers of the Camerimage festival in Lodz. He's now back shooting in and around Los Angeles.

Even at this relatively advanced stage of production, Lynch is cagey about when it will be finished. But it's understood that StudioCanal is aiming for a world preem at Cannes next year.

"Making a film is a beautiful mystery," Lynch says. "You go deep into the wood, and you don't want to come out of that wood, but the time is coming very soon when I will have to."

Lynch has financed the production to date from his own resources, with his wife and longtime artistic collaborator Mary Sweeney producing. The budget is unknown.

What Lynch will reveal -- and indeed, waxes lyrical about -- is the fact that he's shooting the movie on digital video.

"I started working in DV for my Web site, and I fell in love with the medium. It's unbelievable, the freedom and the incredible different possibilities it affords, in shooting and in post-production."

"For me, there's no way back to film. I'm done with it," Lynch says. "I love abstraction. Film is a beautiful medium, but it's very slow and you don't get a chance to try a lot of different things. With DV, you get those chances. And in post-production, if you can think it, you can do it."

DV has clearly given Lynch the freedom from having to clarify his intentions -- to financiers, or even to himself -- before he starts shooting.

"The explaining of things in words is always a huge problem," he confesses.

He characterizes the DV production process as a journey of "huge exploration" to discover what his film will be.

"I'm writing as I go," he says. "I believe in the unity of things. When you have one part, and then a second part that doesn't relate to that first part, it's very curious to find that they do relate after all. It's a most beautiful thing."

He also believes that it produces a different kind of performances from actors. "When you run out of film, you have to stop and reload, and during that time the heat sometimes goes off. But with this medium you can keep that heat, and it builds, and it's beautiful to see."

As for the quality of the DV image, Lynch says, "It looks different. Some would say it looks bad. But it reminds me of early 35mm, that didn't have that tight grain. When you have a poor image, there's lots more room to dream."

"But I've done tests transferring DV to film, and there are all kinds of controls to dial in the look you want."