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British designer Freyja Sewell’s Hush pod is made with all-wool felt and lined with felt pillows.

Felt is old school. The cloth – usually made of matted, compressed wool or rayon fibres – is the stuff of granddads' fedoras and grannies' crafting kits. But its roots go deeper, back thousands of years, when Asiatic tribes developed the textile for clothing, blankets and to insulate their yurts.

Today, many of us use felt unknowingly – as the lining in a car bra, the scuff protector on chair legs. It's a practical material, but its aesthetic qualities – fuzzy, earthy, a bit Muppet-like – can seem a little fusty.

Recently though, interior designers, architects and furniture makers have been using the age-old material in bold new ways, turning it into something rich, dramatic and luxurious.

One attraction is felt's amenability to being cut with exacting precision, into clean, laser-straight edges. Even intricate patterns are possible, meaning a sheet of felt can be trimmed and sliced into something with lace-like delicacy.

It has a chameleon-like versatility. Depending on how the fibres are piled, it can be pliable or rigid, shiny or flat, paper thin or chunky and thick. The texture is malleable: When it's teased, it looks fun and frizzy. When left alone, it can almost have a stone-like smoothness.

Felt's eco-cred also attracts designers. When it's made with organic wool (from animals that have been treated humanely), and dyed with non-toxic pigments, the fibres are sustainably produced (you don't, after all, need to kill the sheep to get the wool). And although felt isn't itself recyclable, it's often made with recycled wool fibres or cast-off materials. Which means that as an interest in environmentally friendly design grows, so too will an interest in felt.

"I like felt for its rich, rich look," says Toronto-based designer Kathryn Walter, who works both independently and with architects and interior designers. Through her 12-year-old Felt Studio, she creates furniture, decor and intricate installations, using different thicknesses of felt.

"And even though it's soft, there is also a strength about it," she adds. "In terms of its appearance, definitely – it can be up to an inch thick – but also effect."