Take a right, said the dashboard

One day, your car will tell you the way to the nearest pub.

We were driving down a leafy Berkshire lane in a canary yellow BMW convertible, looking for the railway station. I hit a couple of keys on my laptop computer, and it spoke to me. "The nearest station is 1.4 miles, at your 11 o'clock," it said. We headed off, and the computer kept up a commentary. "Destination 910 yards. ... We are near a pub called the Three Jays." I looked up - we were passing the Three Jays.

This was an in-car navigation system. The screen displayed a map of Ascot, a green circle showed our progress, and a white square marked the station. It wasn't entirely accurate - at times we appeared to be ploughing through a row of plush sitting-rooms - but it was good enough to tell us whether we were going the right way, and roughly how far we were from our destination.

In Japan, one million cars already have satellite navigation systems, while Computer Cab, the London taxi group, uses one to keep track of its vehicles. It seems inevitable that in-car navigation will become another unmissable extra. At least it is useful.

As with the Internet, we have the US military to thank for this new leap in convenience.The Department of Defense has created the Global Positioning System, which can pinpoint your position, be it in Ascot, Alice Springs or Antarctica.

GPS consists of 24 Rockwell-built satellites orbiting 12,600 miles above the earth's surface. Anyone with a GPS receiver can tune into them and work out where they are. The receiver scans the skies until it has found four satellites, and then measures the time the radio signal takes to travel from each satellite to its antenna. It calculates the distances from this, and uses a process of triangulation to work out where it is. In theory it needs only three satellites, but a fourth improves accuracy.

Until recently only the military had the hardware to use GPS, and thanks to a coding system best levels of accuracy are still theoretically available only to the armed forces. This gives a 3-D position accurate to 16 metres.

Civilians are supposed to get only 100-metre accuracy - the DoD has built in a deliberate error, so that GPS cannot, for example, be used by the Iraqi army (it also explains why the BMW was driving through those sitting- rooms). But this error is likely to be dropped because there is a simple way to correct it. By feeding in known co-ordinates of points on the ground, accuracy can be improved to within 10 metres.

Most civilian users of GPS are yachtsmen, though hikers are cottoning on. Simple hand-held units cost between pounds 200 and pounds 400, though more sophisticated ones cost several thousand. But Robin Lovelock of Sunninghill Systems, which developed the GPSS system I was testing, is convinced real growth will come from the car market.

Mr Lovelock is a computer engineer who worked on military navigation systems for Nato and GEC-Marconi. For the past three years he has been perfecting his civilian version, and has reached a deal with several computer magazines to give away a "cut down" version of the software on their cover disks. This will work on most PCs (286 and later), though it is not much use on an immobile desktop computer. The full pounds 1,000, 11-disk, 20Mb version contains more mapping as well as a Japanese translation - Mr Lovelock believes Japanese expats, used to GPS from home, will be among his early customers.

To test the GPSS system, we installed the cut down version on a laptop and linked it to a GPS receiver. This was connected to a magnetised antenna, which sat on the boot of the car. It is Mr Lovelock's voice that welcomes you when you switch on. The receiver thought for two minutes before announcing it had enough data, and displayed the position as a grid reference. It also announced: "We are 25 miles south-west of London and 1.1 miles south of Ascot."

The machine tracked us as we headed off. Because Mr Lovelock had incorporated a large-scale map of his local area, it had far more detail for Ascot than for other regions. He hopes users will feed in map data they need - it can be bought on CD-Rom, or transferred from a map using a hand scanner. There is, in fact, no need for a map if you know the grid reference of your destination - the computer will tell you where it lies in relation to you, and how far away it is. He has also fed in data such as Little Chefs and National Trust sites, and hopes companies will make more available on disk. It is possible to customise the GPSS software by adding, for example, your friends' houses with their grid references.

To make it really useful, this system requires considerable expense. As well as a laptop PC (no Mac version yet) and a GPS receiver, you would probably need to feed the computer's sound through the car's stereo. If you are driving alone, you need voice recognition software. The GPSS system is designed to link to this, responding to requests such as "Where are we?" and "Eating place?"

Although Mr Lovelock is giving away a cut-down version to help get GPSS known, he hopes that if someone is fitting their car up with a serious system, they will splash out pounds 1,000 on the real McCoy.

In Japan some cars now have GPS fitted as standard. Japanese companies such as Panasonic are working on UK versions but for now, it seems, Mr Lovelock's tiny company has the edge. Will a European maker start fitting in-car navigation systems, and if so will they choose his? He can only hope.