U2 had played the first of two dates at Oakland Stadium, San Francisco, and a small group of diehards were still toasting the success of the Irish band's PopMart show. At 4am in the almost deserted Tosca Cafe, while an ancient jukebox cranked out Caruso, U2 singer Bono stood on the bar and delivered a magnificent, drunken rendition of O Sole Mio. Oasis singer Liam Gallagher perched precariously on a barstool beneath him, a grin of disbelief pasted across his face. His brother Noel leaned against a wall, bottle of beer in hand, smiling with the satisfaction of the cat who got the cream. "You know what Pop stands for?" he joked, later. "Paddies On the P!"

There are those in the British press who would probably suggest other acronyms for the word Pop (the title of U2's latest album), like Pretentious Overblown Pastiche or Posers Out to Pasture. Elements of the media - along with a majority of British rock bands - have long displayed a supercilious attitude to U2. During the past few weeks newspapers have seized on reports of cancelled shows with undisguised glee. "PopMart is becoming FlopMart" said the headlines.

The reports conveniently glossed over legitimate reasons for the cancellation of two U2 dates, ignored the addition of extra shows owing to increased demand and failed to mention that receipts in excess of $100 million (=A3 625,000) have already made this U2's most successful tour ever. Finding these apparent under-achievers playing to 50,000 admirers with Oasis as support band, it seems safe to conclude that reports of the demise of U2 have been greatly exaggerated. Surveying the circular stadium from a glass-walled office, U2's manager Paul McGuinness is in bullish mood.

"Two months into a world tour and we've already sold two million tickets. I confidently expect to sell over five million before we finish next year." Dressed in a white boxing robe, Bono wanders around the dressing room. "I just wonder why they don't want us to win?" he says of his detractors in the British media. "It's like an old public-school thing. We're the outsiders being dragged through the bushes. We're the ruddy Irish boys getting a kicking."

HE makes these observations with a provocative grin. One of pop's more inspirational thinkers, Bono is, in fact, philosophical about negative press. "The term 'stadium rock' is a term of abuse," he remarks, "but it's a bogus term. It's a bit like 'pub rock', which is a term of abuse for bands who won't ever play outside of pubs and generally play the blues badly and drink a lot of beer. But not all groups that play in pubs are pub rock. We can play anywhere we want. It just happens that we have the magic wand to turn these large open spaces into something else. I think the media have a problem with mass appeal. My position is: 50,000 people gathered together might not be wrong."

Oasis take the stage at dusk. In their own country, the boys of Britpop have played to record-breaking crowds, but in America they are a sideshow rather than the main event. The stadium is still filling with U2's followers as the five-piece, augmented by a keyboard player, blast through a rocking, no-nonsense set. It is the first real gig they have played in 10 months, and they clearly revel in it.

Liam's singing is impossibly balanced between passion and nonchalance, while Noel's incendiary lead guitar cuts through the crowd's indifference, bringing people to their feet for a cataclysmic Champagne Supernova. And, astonishingly, Oasis, so used to being revered on their own terms, play the part of understudies with grace, thanking U2 and the audience for the opportunity to perform. "If me mam could see me now," crows Liam, "she'd say, 'you done good, lad, you done good.' "

"I love stadium gigs," Noel declares afterwards, backstage, eyes shining. "There's just so many people. How many bands can do this? How many?" He looks defiant, as he proposes a topsy-turvy theory of the rock world - "U2 and Oasis are the underground and everybody else is the mainstream. Because they're all afraid to be big. They're afraid of success!"

U2's manager declares himself suitably impressed with the leading challengers for the unofficial title of Greatest Rock Group In The World. "You can't help but admire their appetite and style," he says. Even so, he has reservations about how Oasis might take their live show to the next level. "Not many groups can play stadiums. You have to embrace the size, which requires a degree of theatrics. For some reason a whole generation of groups have turned their backs on the theatrical side of rock, which I find disappointing."

It is not an accusation that can be levelled at his own charges. U2 play beneath an arch of glittering neon, before an enormous video wall alive with pop-art imagery. A guitar solo is delivered to a mind-bending psychedelic display, spread across 700 square metres of screen. The group arrive for encores inside a glitterball UFO. The show is on a scale that makes the full moon, suspended in a cloudless sky, look like part of the lighting rig. Yet, impressively, there is room for intimacy and improvisation. U2 transcend the problem of physical distance by sheer force of personality. Bono calls it a "sci-fi gospel show". It is certainly the most impressive multi-media pop event since, well, the last U2 tour.

Liam and Noel stand at the mixing desk, watching wide-eyed. Never regarded as the most articulate of people, Liam nonetheless has a distinctive way of expressing himself. "This is the first time I've seen U2," he says. "Now I understand! It's . . . phwoarghghghgh!" He shakes his head in disbelief, and makes a second attempt to verbalise his enthusiasm. "F**' mad, man. Mad!" U2 and Oasis have formed something of a mutual admiration society.

Backstage after the show, U2's urbane bassist, Adam Clayton, is decked out in Manchester City blues. "They're a great group," admits Bono. "And they've been so supportive of us. You get the feeling the Gallaghers could call round a few houses and sort them out on this U2 soap opera that's going on!"

Liam, who has made an early assault on the supplies of alcohol, hijacks the sound-system. "You gotta listen to this," he insists. "This is f**' great!" It's the new Oasis album, fresh from the studio. The music booms from the speakers, the sound at once recognisable, yet, if anything, fuller, fatter, even more impressive than before. Clutching Bono by the shoulders, Liam sings the lyrics of each song into his face. Bono - catching hold of a succession of instantly memorable choruses - sings along. U2 guitarist The Edge nods approvingly. "People say Oasis songs are obvious, but the way the melodies relate to the chords is quite unusual," he observes. "You get the feeling you have heard the songs before, but they still surprise you."

Afterwards, Bono announces a visit to Tosca's, which is being kept open for the band. A number of stragglers pile into a minibus. Noel, pressed next to Bono, clutches the singer's knee as he enthuses about U2 songs he admires. And then, with startling synchronicity, the minibus radio, tuned to a late-night station, begins to play U2's 1992 hit One. "This is the greatest song ever written!" yells Noel. And he and Liam begin to sing at the top of their voices. Bono, swept along by their exuberance, joins in. As we roll down a San Francisco highway, three of the world's greatest rock stars treat us to an impassioned rendition of a song of unity and brotherly love. "We are one," they sing, "but we're not the same, we've got to carry each other, carry each other . . ."

As the track comes to an end, Bono laughs and hugs Noel's shoulders. "Bands won't admit they like you, right, and you're the greatest band in the world," declares Noel, "and the only band that will actually come out and admit that is the next greatest band in the world!"