"Smell that?" asks Brocas Burrows as he takes me around three floors of gymnasium at the Third Space health club near Piccadilly Circus. "Now you mention it, yes. Very nice." "Exactly," says Brocas, the club's duty manager. "That's the kind of thing people pay to come here for. It's the little touches that make it special. Everywhere you go in the Third Space, it smells good." I'm scenting gardenias, lilacs and, unless I'm mistaken, a hint of the palm-fringed island in the Indian Ocean on a summer's morning. Which is much better than the eau de armpit, stale lager and concentrate of uncleaned toilet that my council-run gym offers.

It's the little things that make people shell out for the Third Space, one of London's posher private health clubs. "Everything has to be pristine," says Brocas. "That's why there are warm, clean towels everywhere, the changing rooms are spotless and the whole vibe is warm and nurturing." Time was when health clubs didn't have vibes or clean towels, but there were used plasters in the showers and a forbidding air of menace around the free weights. But in a club such as the Third Space, where the joining fee is £275, annual fee £990 (or £99 monthly), such things cannot be tolerated.

There are places in London where you can bust your gut more expensively (and much more cheaply), but the fruity marketing of the Third Space is suggestive of a new zeitgeist. "The philosophy is that you have three spaces in your life - home, work and here," says Brocas. "It's the third most important space in our members' lives - and for some of them it's even higher. It's a spiritual centre in a way." The third space in people's lives used to be the church, or the pub. Now, at least for a growing minority of Britons, it is the health club. The Third Space is not so much a gym as a cult where the like-minded gather, a place that you could spend all your waking hours. "Some just come for a steam and a shower before they go out for the night. Some seem never to be anywhere but here. They work out, send some emails, have something to eat, read the papers, just hang. It's a great place to be."

"That said, most of our members are very time poor," says Brocas as we visit Fresh and Wild, the club's two-storey organic foods supermarket. "The demographic is mostly people aged 25 to 40, from A-list celebs to cabbies. That lack of time means that we tailor our services so people can get the most out of the experience. That's why in our medical centre you can see a GP at lunchtime without having to take the morning off or having to go back to where you live. You'll find they come here for a workout after the office, then to the supermarket and buy a salmon fillet and some couscous, warm it up when they get home. They don't have to go anywhere else during their day. It's all about convenience and ease."

The Third Space members can use three floors of gym equipment (the running machines have individual TV screens with Sky Digital's premium channels), a 20m ozone-treated pool (the ozone prevents the chlorine from making your eyes sting) complete with chill-out music and soothing wood panelling. On Tuesdays and Thursdays, a DJ invigorates aerobics classes. There's something called a hypoxic training chamber which, by reducing oxygen in its atmosphere, simulates what it's like to work out at 8,500ft. There's a dojo where, among other things, you can practise the marital art of eskrima. Which is? "Fighting with sticks and knives," says Brocas. "Pretty fierce stuff." Hope he's joking about the knives. There's a boxing ring, too ("We try to cultivate an underground, urban feel here. It's less macho in other parts of the gym"), a machine-based pilates studio, a climbing wall. As for personal training (which costs £40 an hour), the Third Space lists 29 trainers on its website, one of whom is Cathy Brown, Britain's only pro female boxer, who, for only £60, will kickbox you around the ring for 90 minutes. Nice.

One facility that the Third Space is particularly keen on promoting is the Wash, Dry and Fold service. You pay £35 for 10 washes, which entitles you to drop up to five items of sweaty gym clothing at a designated point and find them fully washed and returned to your locker 24 hours later. "It's brilliant - like having your mother in the club," says Brocas. They don't shine your shoes, as they do at many City gyms, but the whole tenor of the place is that nothing is too much trouble. It's a tenor that recalls the exchange between Dudley Moore's eponymous playboy and John Gielgud's butler Hobson in the film Arthur. Arthur: "Do you want to run my bath for me?" Hobson: "It's what I live for ... Perhaps you would like me to wash your dick for you?" It can only be a matter of time before the Third Space gets someone to do your workout for you, though even then you'll probably still have to cleanse your own genitals.

Such fripperies are becoming essential as British private health clubs strive to tempt their clienteles to resist that mighty foe - a nationwide weakness of resolve when it comes to getting fit. More and more people who join health clubs have motivation issues - especially those who join health clubs as the result of some misbegotten new year's resolution. "Member retention for private health clubs has fallen from an average of about 60% to around 50%," says Dan Waugh, corporate affairs manager at Whitbread PLC, which runs the David Lloyd chain of health clubs. "That is the battle - to keep people to hold to their resolve. That's why you get all these frills. And that's why everybody now - not just celebrities - seem to have personal trainers."

Burrows argues that one way customers keep their fitness resolutions is by buying expensive memberships. He would say that, though. "If you're doling out £100 a month, then you're going to make yourself go more than once a week. Otherwise, you'll be paying out £25 for a workout." It's a good point, though of course, it's a motivating strategy that only works for those with wads of disposable income.

In any case, there is a paradox at the heart of Britain's fitness industry. It is that we have the most sophisticated health clubs and the highest market penetration of health clubs in the world (apart from the USA), but at the same time we are the least physically fit people in Europe. It's a paradox that's simply solved: only a small minority of Britons bends the knee before the secular temples that are gymnasia; the rest are ingesting lard, salt, sugar in unprecedented quantities as they seek to put the lifestyle philosophy of Wayne and Waynetta Slob into practice.

According to a recent survey by Eurobarometer, more of us are unable to walk, climb stairs or carry a heavy bag without difficulty compared with most other countries. Six in 10 of us admit we do not take regular exercise, such as cycling or aerobics. Twelve per cent of Britons say they struggle to walk 500 yards without difficulty, 15% find it hard to climb stairs and a similar proportion cannot carry a 13lb bag. This is a country whose conflicted attitude towards fitness is highlighted by the fact that last year's entrepreneur of the year was a woman called Tamara Hill-Norton, who produced the SweatyBetty range of women's sports clothes. Piquantly, the clothes themselves are not necessarily designed for workouts; you can wear them to look sporty. But Waynetta Slob used to wear matching jogging pants and hoodie, if you catch my drift.

At the same time, though, the health club industry is growing steadily. According to Mintel, turnover for private health clubs is currently £1.85bn - up from £1.23bn in 1999 and expected to rise to £2.84bn in 2007. True, there was a blip a couple of years ago when a downturn in the City resulted in redundant financial workers abandoning their health clubs in droves. "That was when some of the big health-club chains really got burned," says Dan Waugh. "They suffered because they were based near workplaces rather than people's homes. There was an oversupply of clubs in these areas and demand dipped as people got laid off. We were relatively less exposed at David Lloyd because we're suburban rather than urban."

But that was a slowdown in growth rather than a downturn, and the British festish with fitness carries on. It's made manifest in the current obsession with personal trainers, even though a Which? survey pointed out that a large minority of them are shockingly underqualified. Some personal trainers become celebrities parallel to TV chefs: just as Delia has a lucrative multimedia operation complete with downloadable recipes, so celebrity trainers offer online workouts you can download and workout books that you can put into practice in your own sweet time. Among these are Simon Waterson, the ex-commando trainer who made Geri Halliwell the woman she is today; David Marshall, who trained Sophie Dahl as she withered to a size 10; Jamie Baird, who helps Madonna sculpt her biceps. But, just as it is a moot point whether we can cook any better as a nation as a result of Delia, Jamie and Nigella's outpourings, so it is at least debatable what positive impact these lucrative fitness sidelines have had on Britain's fitness.

The fitness fetish, though, is most apparent in the number of clubs that keep opening. In 1999, 155 new health clubs opened (no statistics are compiled for clubs that closed during the period), in 2001 the figure was 172, and in 2003 it is estimated that 95 new clubs opened.

This trend isn't good enough for Fred Turok, chief executive of LA Fitness. He recently suggested that if the government is serious about getting its obese citizens to go to the gym, then it ought to provide tax breaks on health-club membership. He points out that recent research showed that if obesity in the UK continued to grow at the same rate, the cost to the country by 2025 would be £25bn - equivalent to the total current NHS budget. He told shareholders last November that the government's anti-obesity campaign would be boosted by lowering VAT on gym memberships and providing tax breaks to companies that provide staff gyms or discounted memberships.

It's hardly an argument that should impress culture secretary Tessa Jowell, who has been ordered by Tony Blair to produce an "ambitious and interventionist" fitness and sporting strategy. There are few signs that posh chains such as LA Fitness - which proposes to open up to five health clubs this financial year - will open in areas that really need them, still less discount membership fees to the poorest. "People with the worst health and fitness in the country are people who can't afford gym membership," says Dan Waugh. "There aren't Holmes Place gyms on Glasgow council estates. Tax breaks would have negligible impact on the problem."

That sort of reform, in any case, could only be a minor part of a strategy to encourage Britons to adopt less sedentary lifestyles. The Activity Coordination Team, a recently established government task force, is considering much more basic ideas. For example, signs telling people they will live longer if they walk up the stairs rather than take a lift could be displayed in public buildings as part of a government drive to cut rising levels of obesity.

The aim is to make Britain more like Finland, the fittest country in Europe, where 70% of the population do five sessions of at least 30 minutes' exercise a week (only a cynic would suggest that's because there isn't much else to do). One-third of Britons do the same amount of exercise. One possibility is extending the system of so-called "activity buses" used in Manchester to transport people free to leisure centres. The joint initiative between the local council and Sport England targeted those from deprived backgrounds, many of whom allegedly do little exercise.

All of this is a million miles away from the Third Space with its buff clientele and meticulously buffed changing rooms. "The economy is about to go through the floor and luxury goods are going to suffer, which you might think is rather scary," says Brocas as he surveys a row of fabulously abbed joggers. "Well, actually, it's not scary for us. We've been open for two and a half years and we've weathered the downturns, and even when the economy suffers people still seem to shell out on clubs like ours. You ask yourself when all the expenditure is going to stop, but there doesn't seem to be any slow down. We're going to be around for ages."