Porn can be art says ex-stripper Lucy Sparrow who has created an erotic emporium in Soho

'I hope the sex workers find it funny', she tells Matilda Battersby

Naked ambition: Lucy Sparrow (Micha Theiner)

The YBAs are all grown up and the British contemporary art scene is rather well behaved. Enter Lucy Sparrow, 29, an ex-stripper from Bath who sews her art out of felt and is about to turn a corner of London's Soho into a seedy-sounding but actually incredibly clever sex shop installation filled with hundreds of dildos, porn mags, S&M equipment and even STIs in sweetie jars.

Visitors will be able to buy felt johnnies from a working condom machine (safety not guaranteed!), watch a Fuzzy-Felt peep show and even try out a pneumatic sex chair. So dedicated is Sparrow to making everything in sight out of fabric that even the wallpaper is knitted.

No, this isn't a stitch-up, this is serious and important art. But it is deliciously playful, naughty and Sparrow is entirely free of the fusty conceptualising that give art students a bad name. She is also a modern artist for the digital age having gained seemingly overnight success after a Kickstarter campaign for her debut show, Cornershop, went viral last year earning her thousands more than she'd aimed to raise and helping to secure Arts Council funding.

Cornershop did what it said on the tin and was a grocery store consisting of 3,994 everyday items from Spam to toilet roll, Tampax, Rizla papers and Marlboro Lights – all painstakingly sewn by hand. It opened in Bethnal Green, east London, in August 2014 and “things went bananas”, in Sparrow's words, almost immediately making it a sellout word-of-mouth success.

Suddenly the woman who left school at 17 and flunked out after a year of art college could live as an artist and the five years she'd spent lap dancing to fund her artistic ambitions were a thing of the past. When we meet for this interview at a west London café she is wearing specs Deirdre Barlow would be proud of, a pineapple-covered jump suit and is holding Basil, a stuffed toy banana, who apparently goes everywhere she does.

“I think nothing of going on stage naked. But the nerves before the opening night of an exhibition are just awful,” Sparrow reveals.

“There was a lot of waiting around for people to come in [to the clubs]. I used to sit there sewing. I'd be there deciding with the girls what worked and I'd be sewing in hair extensions, sewing costumes up, drawing the dancers. They were brilliant life models. That was the amazing stuff that I miss about it,” she says.

Unlike Cornershop, which was accessible to everyone, her sex shop, loftily titled Madame Roxy's Erotic Emporium, will carry an age limit of 18 and Sparrow warns that its contents might well shock and bewilder anyone who hasn't entered such a place before. However, I suspect it is more likely to mostly, and quite literally, turn a subject that people are uncomfortable talking about or disapprove of into something much more cuddly. Huggable vibrators? Why the hell not.

And as Sparrow, crucially, sells her art at affordable prices (this show starts at £20 for the smallest pieces) she really is hoping to attract everybody from bigwig art collectors to the pop-up-shop-loving hipster crowd – and, most importantly, the women who work in the sex industry themselves.

“I'm hoping that the girls [sex workers] will come into the shop and find it funny and interesting. I hope that maybe I can do some sewing classes with them,” she says. What would you make? “Dildos. I dunno. They might want a day off from dildos. But if they want to come in for a bit of light relief in between shifts then that's great.”

The objects Sparrow makes may have novelty value but there's a serious message behind them. She is concerned by new pornography laws that appear to quietly censor the portrayal of female pleasure. An amendment made to the 2003 Communications Act effectively bans a raft of acts from being portrayed by British pornography producers. These range from spanking to face-sitting and female ejaculation – and the move has sparked a series of protests by some in the sex industry of which Sparrow is fierce supporter.

“It seems absolutely absurd,” she says. “The one that is the most shocking is the female ejaculation. So squirting or gushing porn. But it's an involuntary act. It's like guy's cum shots, that's an actual porn thing, it's the money shot really. But women doing it has been banned.”

Sparrow is also trying to test the bounds of these new laws through her show. For example would a porno made out of stock animation that features face-sitting be subject to them? Visitors can pay to see a showing of this film in a basement cinema below the shop.

'Madame Roxy's Erotic Emporium' (www.madameroxys.com) to 17 October at 2 Green's Court, London, W1F 0HB, No Under 18s