This month, a group of prospective students are due to arrive at a test centre in San Diego, California, where they will have their palms scanned and IDs checked. They will take a cubicle seat in front of a computer, monitored by CCTV cameras, with earphones on, for a test that might change their lives. These guinea pigs will be taking the first paid-for Pearson Test of English (PTE), which examines a candidate's reading, writing, listening and speaking ability, entirely by computer.

English is the language of choice for many of the world's MBA courses. But the overseas student who thinks a computer mouse is something that chews the wires is a familiar figure to staff.

"Business schools have been asking for a better test for a long time," says Judy Phair, of the Graduate Management Admissions Council. "Students who can't speak or understand English can't contribute to the classroom interchange that is so critical to MBA programmes." The council administers the GMAT reasoning test taken by most MBA candidates, and endorse the PTE.

"Standardised language tests are often misleading," says Mike Luger, director of Manchester Business School (MBS), which gives every candidate a personal interview in English, and offers lessons to the weakest speakers.

The new PTE has already shaken the world of English-language assessment, where the two market leaders are the Test of English as a Foreign Language (TOEFL), based and marked in the US, and the International English Language Testing System (IELTS), run chiefly by the British Council and Cambridge University. TOEFL tests are largely marked by humans, and the IELTS exam involves a one-to-one interview with a trained assessor. But the PTE is fully automatic. Pearson, the publishing conglomerate, says this "produces scores comparable to human raters, but with the accuracy, consistency and objectivity of a machine".

Security is a big issue. This year a Californian business school experimented by offering MBA candidates the chance to submit essays not in text but in audio clips, which makes it harder to cheat by having someone good at English stand in for someone who is not. The audio clips proved popular, both with students and with assessors worried about identity fraud.

The new Pearson test requires candidates to record a 30-second audio clip. ETS, the American organisation that runs TOEFL, has just announced that it will also offer an audio clip. But Mark Anderson clearly feels that he is ahead of the game. "For our candidates, time is often of the essence," he says. "There are no waiting lists and the results will be available within five days. And they can send the results on to as many institutions as they like with no extra cost."

For schools, the PTE provides fully electronic access to score data. "And we provide 11 scores, the richest of any provider, which gives an insight into strengths and weaknesses."

What kind of English will this latest language test measure? "We call it real English," Anderson explains. "Our questions are all based on real-life examples of English being used – a lecture, for example. We have focused on international English, which is neither specifically British nor American, to reflect the academic environment."

The potential market is huge. More than two million English tests are taken each year worldwide, at a cost of up to $250 (£157) each, and millions of dollars more are made from training. But the first question a student will ask is: does my chosen school accept this new test? And this is where the real battleground will be.

The PTE test has already been recognised by almost 800 programmes, including the London Business School and Insead in France. That is not surprising, as Pearson also administers the trusted GMAT test. However, the opposition has quite a big head start. More than 6,000 organisations worldwide accept IELTS results, and 7,000 programmes accept TOEFL.

Behind this war of words lies a larger question: will English remain the sole international language of business? The China Europe International Business School in Shanghai, now one of the world's top 10 schools, has changed the rules this year, requiring all its overseas MBA students to take lessons in Mandarin before starting the course.

The reasons, says the school's Professor Lydia J Price, are twofold. "It's difficult for a foreigner to get a job in China today without speaking at least some Chinese and we want students to learn to be culturally sensitive. While our course doesn't bring them up to fluency before they start MBA classes, it will bring them to the level where they can have a casual conversation."

Indeed, Price foresees a situation in which if you're really going to operate in the world there are two languages you must know: English and Chinese.

‘I went to a training school in China’

Biao Wang, 30, took an IELTS English-language test in China, which was a requirement for the MBA he studied at the University of Bedfordshire Business School

“I chose IELTS because my perception was that TOEFL was Americancentric.

"To prepare for the test I went to a training school in China. They are very expensive – such a course might cost about £1,000 now – but the trouble is that their aim is to get you past the test.

"I remember meeting some Chinese Masters students in London. They had been here five years and could hardly speak English. The problem is that the Chinese tend to live together and so they can’t practice. I taught myself by living with an English family.

"I now have my own business in Luton advising companies on how to do business in China. A lot of joint ventures have failed because of cultural misunderstandings.

"Having good English is very important.”