The Little Grey Men by B. B.
"This is a story about the last gnomes in Britain. They are honest-to-goodness gnomes, none of your baby, fairy-book tinsel stuff, and they live by hunting and fishing, like the animals and birds, which is only proper and right." --From the author's introduction
On the banks of the Folly Brook, inside an old oak tree, live the last three gnomes in Britain: Sneezewort, Baldmoney, and Dodder. Before their fourth brother, Cloudberry, disappeared upstream seeking adventure, they lived happily and peacefully among their woodland friends. But now spring has come and the brothers start thinking about spending the summer traveling upstream to find Cloudberry.
Before long they've built a boat and set off for unknown lands, where they find themselves involved in all kinds of adventures with new friends (wood mice, water voles, badgers) as well as with enemies (two-legged giants).
A classic of British literature, BB's The Little Grey Men has much in common with Kenneth Grahame's The Wind in the Willows, though as BB acknowledges in his introduction, the talking gnomes are only part of the story. The true plot, which BB, an unparalleled naturalist, brings thrillingly to life is the magic of the woods and streams, the beauty of unspoiled nature and of the great diversity of living things.