The American animation studio Laika has a mixed track record: their 2009 Neil Gaiman adaptation Coraline was truly imaginative, the recent ParaNorman a relative dud. In general, though, their mock-Gothic stop-motion productions have a richness of texture that's a welcome alternative to the streamlined style of Pixar.

Directed by the team of Anthony Stacchi and Graham Annable, Laika's latest offering The Boxtrolls is more steampunk fantasy than traditional fairy tale. The setting is Cheesebridge, a fantastical city resembling 19th-century Paris rebuilt on a steeply sloping island, with narrow tenement blocks looming over winding cobbled streets. Beneath these streets dwell the Boxtrolls, snot-coloured little monsters who gobble creepy-crawlies and wear cardboard boxes that double as hiding places when they're scared – which, despite their fearsome reputation, is most of the time.

Loosely based on a book by British children's author Alan Snow, the convoluted plot has the flavour of Dickens or Victor Hugo. The human hero, known as Eggs (voiced by Isaac Hempstead Wright), is kidnapped as a baby and raised by the Boxtrolls to believe he is one himself. Above ground, the legend of his disappearance encourages paranoia among Cheesebridge citizens, allowing crazed pest exterminator Archibald Snatcher (Ben Kingsley) to pose as the city's saviour.

Snatcher is essentially a social climber, longing to join Lord Portley-Rind (Jared Harris) and his fellow dignitaries at their regular banquets of cheese. But when Portley-Rind's young daughter Winnie (Elle Fanning, sounding like Helena Bonham-Carter) meets Eggs and realises that the Boxtrolls aren't evil after all, there's the chance to blow the lid off the whole stinking town.

That's just the start: I haven't mentioned Eggs's long-lost father, a gibbering inventor voiced by Simon Pegg, nor Snatcher's drag alter ego Madame Frou Frou, who specialises in anti-Boxtroll songs. In short, this is good subversive kids stuff in the tradition of Joe Dante and Tim Burton, championing freaks and youthful underdogs while portraying adults, especially those in authority, as corrupt, foolish, or deranged.

Viewers of all ages should appreciate the intricate animation and dynamic staging: the entire story is conceived in spatial terms, with characters at different social levels literally positioned above or below. There's also some genuinely witty dialogue, especially the philosophical exchanges between henchmen Mr Pickles (Richard Ayoade) and Mr Trout (Nick Frost) who act from the best intentions but can't help wondering if they mightn't be the bad guys after all.