In his poem 'Musée des Beaux Arts', W.H. Auden commends the Old Masters for noting how people go about their lives seemingly untouched by earth-shaking events happening around them. Brueghel's ploughman, for instance, gets on with his work in the foreground while Icarus plunges into the sea behind him. This is, of course, both true and untrue. We are affected by public affairs whether we like it or not; and anyway today the fall of Icarus would be covered live on TV and Brueghel's peasant would watch a report of it on the one o'clock news while having his ploughman's lunch.

Such a situation is at the heart of A Walk on the Moon, an admirable directorial début by actor Tony Goldwyn, scripted by Pamela Gray and co-produced by Dustin Hoffman. The setting is a modest Jewish holiday resort in the Catskills, two hours' drive from New York City, where the lower-middle-class TV repair man Marty Kantrowitz (Liev Schreiber) brings his 31-year-old wife Pearl (Diane Lane), their 14-year-old daughter Alison (Anna Paquin) and seven-year-old son Daniel (Bobby Boriello) and his mother Lilian (Tovah Feldshuh) to spend the summer. They live in the same shabby chalet as in years past and there is a familiar routine of mah-jong, 16mm film shows, Fourth of July celebrations with entertainment by stand-up comics on the so-called 'borscht circuit', fortune-telling sessions, supervised swimming in the lake, regular announcements over the Tannoy that 'the ice-cream man is on the premises', 'the blouse man is on the premises', 'the knish man is on the premises'. All of this is amusingly, unpatronisingly observed.

But this isn't just any summer, either for the Kantrowitz family or America. It's 1969. The war is raging in Vietnam (Alison defiantly wears a peace symbol on her necklace); the first moon-landing is to take place on 20 July; and a rock festival is to be staged in mid-August on a farm at Woodstock, a few miles away.

There is something disturbing in the air and it gets to Pearl, a good-looking woman forced into marriage at 17 to a humorous, unromantic, hard-working husband through an accidental pregnancy, and discontented with her lot. Her daughter's first period causes this frustrated woman to reconsider her life, and she slowly falls for the new 'blouse man', a credibly sensitive, gentile hippie, Walker (Viggo Mortensen). First she buys a tie-dyed shirt, then he gives her a lift in the rain. Eventually they make love, the night of the moonwalk when everyone at the resort is watching the astronauts and Marty is working overtime back in the city repairing TV sets so their owners can follow the Apollo 11 mission. As Armstrong takes his one small step for a man, Pearl is taking a giant step for a woman - out of a steady marriage and into the destructive world of adultery and the possibilities of freedom.

Her perceptive mother-in-law senses what is happening and cautions Pearl, but a few weeks later, when Marty can't get to the resort because of the traffic jams caused by Woodstock, Pearl and Walker go to the Festival where they're seen by her daughter cavorting with the counterculture. Mother and daughter confront each other, Pearl confesses her infidelity to the angry Marty, and the family and marriage are both threatened with disintegration.

Events thereafter take a gradual course with much soul-searching, a small touch of melodrama, a certain rhetorical glibness, but nothing implausible or unduly sentimental. This is a small gem of a movie, accurate in its evocation of the recent past, honest in its confrontation of potentially tragic crises. It neither blames nor exonerates. The acting is faultless, with Tovah Feldshuh especially memorable as the mother-in-law, a first-generation American who has seen the world transformed around her.