The world of cinema special effects has expanded at an alarming rate in the past decade, but Jim Henson's Creature Shop has always been at the cutting edge, challenging our notion of reality with synthetic characters that seem to be alive. We might not have believed that a pig could fly after seeing Babe, but we sure as hell believed one could talk, as the drop in bacon sales following the film's release showed.

The latest Eddie Murphy vehicle, Dr Dolittle (right), is unlikely to engender a similar fondness for rats among cinema-goers. But, what this film and the week's other blockbuster release, Lost in Space, eloquently demonstrate is the way that new and traditional technologies are being employed (sometimes together, sometimes separately) by the Creature Shop, at its workshops in London and LA, to achieve its goal of creating the illusion of life.

Post-Jurassic Park, many people said computers would supersede physical puppetry (or animatronics, as it's known in the trade). However, it soon became clear that unless you'd got a huge budget, a purely computer-generated creature was unthinkable. And there are other, more practical reasons why animatronic tigers, rats, dogs and birds are still finding their way into films like Dr Dolittle.

"One of the fundamental things that animatronics allows you to do and computers can't," says Creature Shop creative supervisor David Barrington- Holt, "is have an actor physically make contact with the character. So, when Eddie Murphy needs to operate on a tiger, that tiger is really there on the table because it is a puppet. This allows the actor to truly relate to the character, and to allow a level of interaction of performance that could not be achieved with computer graphics."

But Barrington-Holt concedes that digital puppeteering also has advantages over animatronics in certain circumstances, as was shown when a decision was made to render the cute space monkey, Blawp, in Lost in Space, as a computer graphic (CG) character.

"It started out as a split between animatronics and computers," says CG project supervisor Hal Bertram. "But the choreography that was required of the character evolved, and it was being asked to do things that the animatronic couldn't. But the fact that the animatronic was often on set was great because the actors were interacting with a thing that was really there. It also meant that in some shots we were later able to carefully superimpose the CG creature onto the animatronic one. There's this nice moment where it strokes Penny's face and the shadow is beautiful, because it's actually the animatronic's shadow."

Shadows, hair, fur and clothing are all difficult to recreate on computer, says Bertram. And because it is so hard, the per frame costs soar. This is why films involving furry creatures, such as American Werewolf in Paris, employ both CG and animatronics. "Unless you have a Spielbergian amount of cash, it's really your only way."

Once the Creature Shop has designed and built a puppet, it is then brought to life. Instrumental in making that happen is the Oscar-winning computer-based Henson Performance Control System (HPCS). This allows an off-camera puppeteer to remotely control the facial expressions on an animatronic suit worn by a performer, or, in the case of the tiger in Dr Dolittle, on a hand puppet - because it's happening then and there on set, the performance can be improvised and directed.

To make it appear that the animals in Dr Dolittle were really talking, the actors providing the voices recorded their lines in pre-production, and then a puppeteer lip-synched the animatronic's mouth to match the words. These movements were then stored in the HPCS and could be triggered on set at the appropriate moment. "Perfect lip-synch follows in perfect time with the voice track," says Barrington-Holt, "meaning any shot that the director makes is not going to be lost through faulty lip synch."

The HPCS also played a part in creating the performance of Blawp. The flexibility it offered was one reason why the Creature Shop's three-year- old computer division beat Industrial Light & Magic, in a David versus Goliath pitch to create the CG version of the character.

Blawp's expressive facial features and complex movements are impressive demonstrations of how it's now becoming possible for the Creature Shop to translate the puppeteering skills it has developed over the years into a new medium. However, neither Bertram nor Barrington-Holt believes that computers will kill off animatronics.

"There are some people in CG who I'm sure are trying to dominate the world. But if we've got all that down there," says Bertram, referring to the creative hothouse that is the animatronic workshop, "why try to replace it with a much more complicated [and expensive] technique? It's much better to keep it complementary."