We have analysed data from five XMM-Newton observations of XB 1254-690, one of them simultaneous with INTEGRAL, to investigate the mechanism responsible for the highly variable dip durations and depths seen from this low-mass X-ray binary. Deep dips were present during two observations, shallow dips during one and no dips were detected during the remaining two observations. At high (1-4 s) time resolution "shallow dips" are seen to include a few very rapid, deep dips whilst the "deep" dips consist of many similar very rapid, deep fluctuations. The folded V-band Optical Monitor light curves obtained when the source was undergoing deep, shallow and no detectable dipping exhibit sinusoid-like variations with different amplitudes and phases. We fit EPIC spectra obtained from "persistent" or dip-free intervals with a model consisting of disc-blackbody and thermal Comptonisation components together with Gaussian emission features at 1 and 6.6 keV modified by absorption due to cold and photo-ionised material. None of the spectral parameters appears to be strongly correlated with the dip depth except for the temperature of the disc blackbody which is coolest (kT similar to 1.8 keV) when deep dips are present and warmest (kT similar to 2.1 keV) when no dips are detectable. We propose that the changes in both disc temperature and optical modulation could be explained by the presence of a tilted accretion disc in the system. We provide a revised estimate of the orbital period of 0.16388875 +/- 0.00000017 day.