Goblins aren't the most well treated of fantasy races. Usually depicted as savages hell bent on carving up dwarves and anyone else chancing their arm at some good old fashioned dungeon crawling, green skins, it would be fair to say, don't enjoy a good press. Well, that's all about to change. Firefly Studios, of Stronghold fame, is attempting to sprinkle some positive PR on the misunderstood goblin race with its new third-person PC and Xbox 360 action game Dungeon Hero. We unsheathed our broad sword and took a trip to the developer's Clapham HQ to find out more.

Simon Bradbury, co-founder Firefly Studios and Dungeon Hero designer, describes it as a "shot in the arm" for the dungeon crawler. "For so long we've suffered under the tyranny of Dungeons and Dragons," he says. "We wanted to give the dungeon a more realistic feel."

Bradbury's dungeon is an altogether different beast. You still play a muscle bound sword wielding hero, but your surroundings, what Simon calls a "living, breathing world", are going to be unfamiliar to most fantasy fans. Our walk through begins in the middle of a level about a third of the way through the game. We're underground in Gold Star City, home of the goblins you've come to help. These goblins are at war with the Red Eye goblin faction, and you can see the effects of battle everywhere you look. Corpses lay strewn about. Soldiers are busy sharpening knives. We see a Goblin surgeon sawing off an unfortunate soul's leg. Stretcher bearers come rushing in with the wounded. There's work to be done, but it looks like Firefly is already approaching that "living, breathing world" ideal it's aiming for. We're promised countless lines of dialogue and more goblins running about showing the player exactly what they get up too in their daily lives. There will even be off duty goblins playing guitar and reciting witty poetry.

It's all about providing a meaningful point of view from the goblins themselves. This time they're the good guys. "There's a point in Oblivion," says Simon, "where you first of all fight rats, then goblins, then you see a goblin eating a rat. We wanted to do that but five or 10 fold."

Our dungeon hero emerges from the underground and begins exploring the trenches. It's here that we're given our first look at the combat. "We wanted something that allowed you to do all of the moves without knowing all of the combos," says Andrew Parsons, lead level designer. "We're a bit sick of those kung-fu movies where they will all surround their target and take their turn to hit." By holding the right trigger or the right mouse button you will go into block mode and from here our hero has a set of moves designed to cope with being surrounded. It's all about strategically making space for critical strikes. Moves we saw included a side kick, a side shield bash and a back elbow, as well as weapon slices. The face buttons are mapped to the front, back, left and right directions. Pressing B on the 360 pad will, for example, make the hero attack to his right. The reverse is true for X. It's designed to give Dungeon Hero's combat a slower, more tactical feel, a tad more realistic than your typical hack and slash.

Waves of goblins attack but our hero is capable of dealing with them all. Attacks look meaty and powerful, sometimes sending goblins flying 20 metres into the air. We're told players will be able to level up the face buttons, concentrating on different styles of play. A red bar shows the player's rage - rage abilities will be automatic, we're told, although we're not quite sure how this will work. With the game over a year away it's not the biggest of deals anyway. What we can be sure of is Dungeon Hero looks promising. It looks fun. It looks different, and it looks intelligent.

We can't wait to see the game after a few more months development

With the goblins dispatched the demo comes to an end. We're told that he needs to go out into Dungeon Hero's version of "no man's land" and fight off a bomb-dropping Zeppelin before making his way into the enemy's trenches. This confirms something we had a feeling about during the demo - it's very World War 1. It's only been about half an hour and we've already seen battle-worn trenches, brutal surgical operations and got a sense of the solemn, depressed atmosphere the game is going for. It's WW1 with goblins, and you're stuck in the middle of it.

While we haven't quite wrapped our head around how Dungeon Hero's combat system will work, we're enthusiastic that it's a game that won't force us to learn another 20 multi-string combos just to get through it. It's an RPG for sure, with levelling up, but it's described as "RPG lite". Firefly is hell bent on making the game as accessible as it possibly can, a far cry from its super hardcore PC RTS strategy heritage with the Stronghold series. And we're glad.

For us the combat system and the game's main character are thoroughly overshadowed by the compelling "living, breathing world" Firefly is developing. This is what interests us most about Dungeon Hero - seeing a dungeon from another point of view. Exploring underground tunnels and overground trenches and discovering that, actually, goblins aren't all that bad after all. That and the promise of a side by side co-op mode.

"What happens when the Goblins want to go to the toilet?" Simon asks. Interesting question. Looks like we'll find out the answer to that, and plenty of other goblin related questions, next year.

Dungeon Hero is due out some time in 2009.