The New York fashion business is visibly Jewish - think Calvin Klein, Ralph Lauren, Donna Karan, Marc Jacobs, Diane von Furstenberg; the fashion model business is not. IMG, the highly professional global marketing group founded by the late Mark McCormack, is the biggest agency in the world; Elite, brainchild of the late John Casablancas, a buccaneering, brilliant, louche Spanish-American, took centre stage in the age of drugs, sex and disco, and remains a major force. The people who more or less invented modelling as a highly paid professional job and built the defining, and for decades the most powerful agency, the trade's gold standard, were Eileen Ford and her husband, Jerry.

The story of Eileen Ford's brilliant, turbulent career is vividly brought to life in a new book by the royal biographer and historian Robert Lacey.

Jerry was tall and handsome, a college sports star, a Catholic boy who throughout his life and his nearly half a century in a cut-throat business, remained the epitome of cool rectitude. Eileen was very different - forceful, passionate, domineering, a mentor and protector to her girls, a heavy drinker, a genius at spotting and nurturing models, a legend and sometimes a monster. When she died age 92 last year, 650 people attended her funeral at St Thomas Church, Fifth Avenue. There were many lengthy obituaries published; they mentioned her Quaker education and that her maiden name was Eileen Otte. What none of them said was that she was born Eileen Ottensoser, daughter of a rather upmarket Jewish debt collector in New York.

Her grandfather Lippman (later Louis) Ottensoser had come to America from Furth in Bavaria, where there had long been a flourishing and distinguished Jewish community, among them Rabbi Zvi Ottensoser, a distinguished scholar, an expert on Maimonides and a follower of Moses Mendelssohn, whose translation of the Torah he revised, improving the German. He was also an enthusiastic advocate of progressive Jews moving across the Atlantic. Among those who headed west from Furth in the 19th century were Julius Ochs whose son Adolph bought the New York Times, Levi Strauss, the blue jeans man and, in the 20th century, Henry Kissinger. Eileen Ford was, in her own sphere, as transformative as any of them. In the 1920s, modelling had been a kind of hobby for good-looking debutantes who weren't always bothered whether they were paid or not; in the early post-war years, when Eileen became involved, it was a trade where photographers ruled and the models were pawns with nobody representing their interests. What Eileen Ford did in partnership with Jerry changed the terms of trade. Her girls were forcefully represented - if you were with Ford you were no longer the victim of photographers' and clients' whims. You were properly rewarded for your time, you were looked after. In a good-cop-bad-cop combination that was not be messed with, Jerry was the good but smoothly formidable giant whose bills people did not fail to pay, Eileen was the fierce fighter crossed at your peril.

During the decades Ford was the top of the tree, they represented 100 of the 20th-century's leading models. Their girls were fabulous, insanely beautiful, quite unlike ordinary human beings. There has always been a lucrative middle-of-the-road market for the sort of pleasant ordinary-looking girls you see in mail-order catalogues or mumsy magazines; those weren't Ford models. Ford models were tall and slim with one-in-a-million glamour. Eileen made her mistakes - for instance she rejected Marisa Berenson: "You don't have the looks," she told Berenson, who was later described as "the world's most beautiful girl" and became one of the highest paid models and a considerable film star. Grace Coddington, a major English model of the 1960s now famous as the genius style director of American Vogue, was attacked by Ford for many deficiencies, including her eyebrows. "This small, intimidating woman," wrote Coddington in her memoirs, "personally came at me with a pair of tweezers." But generally Eileen had a genius for spotting special girls and nurturing them. Lauren Hutton, the most engaging and longest-lasting of all American models, had been rejected by several agencies. She was a bit cross-eyed, she had a gap between her front teeth. Ford too was on the point of rejecting her when for some reason, she realised she had special qualities. So she did, intelligence and independence among them - qualities she has carried through decades of changing fashions. They had disagreements. The agent suggested she get her teeth fixed. Hutton refused. But they appreciated each other's strengths. "Eileen Ford threw a huge cloak of safety over the girls in her care," says Hutton, "and that made her, in my book, a great changer for the sake of women."

The "huge cloak" involved care but also control. Ford did her best to order her girls' lives, trying to keep them away from bad relationships and bad behaviour, steering them towards ones she approved of. Many spent time living in her family home and those from humble origins, as many were, learnt which knives to use in what order at dinner. They were certainly supposed to live right, the Eileen Ford way. Rene Russo, a top Ford model who became a film star, remembers how they had to creep in after late nights out and how berserk she would go if she found an M&M's wrapper in the bin. Jerry Hall was staying there when Mick Jagger came calling for her. Eileen Ford didn't approve. Hall describes those six months there as "the most boring year of my life". Down the decades - from Suzy Parker in the 1950s to Shrimpton in the '60s to Christy Turlington and Naomi Campbell (who both moved back and forth between agencies) in the '90s - Ford was a Rolls Royce organisation. Many models loved Eileen and credited her with making their lives. To others, who she felt had betrayed her during the ferocious inter-model-agency wars of the 1980s, she sent bibles with Judas Iscariot's name underlined. As she grew older, accepting changing times, her attitude to models and sex moderated: "Let's not call it sex, let's call it chemistry… you just hope the chemistry doesn't run rampant."

At her funeral, the priest said "Let us bid farewell to our sister. One day we will meet her again." Not an undaunting prospect. As one of the congregation observed: "It gives a whole new dimension to the promise of eternal life."

Model Woman, Eileen Ford and the Business of Beauty, by Robert Lacey, is published by Harper, £20