In the mid-1980s Martin Phillipps led his rock band the Chills from the small New Zealand city of Dunedin to international acclaim – they were championed by John Peel on the BBC, and by US college radio, and bands including the Fall and REM declared themselves Chills enthusiasts. It seemed at the time that widespread commercial success would surely follow.

Alongside their fellow Dunedin bands the Clean and the Verlaines, the Chills helped pioneer a melodic, offbeat, literate, lo-fi rock music that was dubbed the “Dunedin sound”. These bands all released records on Flying Nun, a no-frills independent record label, and when the likes of Peel and the Village Voice music writer Robert Christgau began championing them, Kiwi rock music experienced an attention it had never previously known. Of all the Flying Nun bands, the Chills were thought most likely to win a wide audience for their intimate, melodic songs, which were written by Phillipps, who has died suddenly aged 61. However, stardom perpetually evaded the band and depression almost destroyed Phillipps.

He was born in Wellington, the son of the Rev Donald Phillipps, a Methodist minister, and Barbara (nee Laurenson), a shop owner and later marriage counsellor. The family moved to Dunedin in New Zealand’s South Island in the late 60s, when Donald was appointed chaplain at the University of Otago.

The arrival of punk rock spurred Phillipps to form his first band, the Same, in 1978. They disbanded two years later and he determined that his new band, the Chills, would essentially be his solo project. His sister, Rachel, was a member of early lineups. Phillipps also played keyboards on the Clean’s 1981 debut 45 Tally Ho! – an unexpected success that launched both the band and Flying Nun – and helped ensure the Chills were also signed by the label.

The Chills’ first single, Rolling Moon, was released in December 1982 and made it to No 26 in the Kiwi charts. When their drummer, Martyn Bull, became severely ill with leukaemia and died in 1983, Phillipps put the band on hold, returning in early 1984 with Pink Frost, a moody, psychedelic-tinged song that won the Chills local and international attention.

In late 1985 they decamped to London, where Peel invited them to record the first of three BBC sessions. Creation Records issued Kaleidoscope World, an album gathering all the Chills recordings to that date: it reached No 3 in the UK Independent charts. In 1987 the Chills played at Glastonbury festival and were lauded by the music press. An official debut album, Brave Words, was recorded in London and released later that year, but lacked the spark of their earlier New Zealand recordings.

Phillipps’ insistence that the Chills would perform only his songs, his way, caused friction and the band continued to experience a high turnover of musicians. Signing to the US label Slash Records ensured that the financial and promotional muscle needed to break through to a wide audience was finally behind the Chills and in 1990 their Submarine Bells was one of the most enthusiastically reviewed albums of the year. It topped the New Zealand charts and the band won both best local album and best single (for Heavenly Pop Hit) at that year’s New Zealand music awards – yet, sales-wise, Submarine Bells underperformed internationally.

The Chills’ 1992 album Soft Bomb was essentially Phillipps solo, recorded in California with contributions from US musicians – including the songwriter and arranger Van Dyke Parks. But as the Chills began a US promotional tour, Slash Records cancelled the band’s contract and tour support due to poor sales.

Phillipps returned to Dunedin despondent, announcing that the Chills were over. In 1995 he released Sunburnt, an underwhelming album credited to Martin Phillipps and the Chills, then retreated into depression and substance abuse: reports about Phillipps now centred not on his music but on his addictions and poor mental health. A supportive network of family and friends ensured he survived, and treatment with the drug Interferon meant Phillipps was free of his addictions – if weakened by hepatitis C – by 2004.

He slowly returned to performing and recording, The Chills’ 2015 comeback album Silver Bullets was released by the British label Fire Records to critical acclaim and the band began touring Europe again. Phillipps appeared on Marc Riley’s 6 Music radio show, pleasantly surprised by younger bands describing his band as an influence and by the interest shown in his new music. The 2021 album Scatterbrain showed Phillipps continuing to produce melodic, dreamy rock music of the highest order.

A 2019 documentary feature, The Chills: The Triumph and Tragedy of Martin Phillipps, traced his story, and followed Phillipps to an appointment with his specialist, who told him that hepatitis C and alcohol abuse had destroyed 80% of his liver’s function.

He is survived by his father and by his sisters, Sara and Rachel.

• Martin Phillipps, singer and songwriter, born 2 July 1963; died 28 July 2024

• This article was amended on 1 August 2024. The university in Dunedin is the University of Otago, and not “Dunedin University”.