BACK IN THE early '80s, Scotland's Waterboys were just one of several Celtic neo-folk-rock bands (along with U2, the Alarm and Big Country) turning spiritual optimism into jangling anthems. Such youthful idealism is difficult to sustain for long, and each band reacted differently.

Big Country and the Alarm grew stale; U2 discovered rock 'n' roll history, and the Waterboys dug into the roots of Celtic folk music. Although the transition hasn't always been smooth, now it is complete. "Room to Roam" is not only their best album ever but also the most vigorous updating of Celtic music since Van Morrison's collaboration with the Chieftains in 1988.

Like the Waterboys' 1988 album "Fisherman's Blues," "Room to Roam" was recorded in Ireland with new band member Steve Wickham providing the authentic folk flavors on the fiddle. The new album, though, sounds far more natural and persuasive than its predecessor, largely because head Waterboy Mike Scott has grown more comfortable with the Irish folk tradition both as a singer and a songwriter. No longer does he strain with attention-seeking angst; instead he sings with a seductive understatement, joining the lovely harmonies.

Scott's lyrics have always been marked by their vivid details, but his new songs have stripped away the former excess to leave songs of such distilled essence that a few may well become Irish folk standards for decades to come. "Song From the End of the World" and "Spring Comes to Spiddal" evoke western Ireland, where the album was recorded, so pungently that one can almost taste the salt air and fish pie. "A Man Is in Love" and "How Long Will I Love You?" are pithy, almost-perfect confessions of new love. Scott's "Further Up, Further In" is a Celtic folk narrative as beguiling as the traditional "Raggle Taggle Gypsy" (an Irish variation on "Matty Groves").

There's a generous helping of 17 songs in all, all of them good enough to make this the year's best folk-rock album thus far.

THE WATERBOYS -- "Room to Roam" (Chrysalis/Ensign). Appearing Saturday at Lisner Auditorium.