Hands-free communication is set to reach new levels of sophistication in a range of cars that will respond to the driver's voice.

Microsoft has developed software that lets drivers control phones and iPods using voice commands, dispensing with the need for hands-on contact with devices if they want to phone a partner or choose a favourite track.

By pressing a button on the steering wheel, the driver activates a pair of microphones embedded in the rear-view mirror. The signal is sent by Bluetooth to a box on the dashboard, where Microsoft's software interprets the sound and sends a message to the phone or music player.

As commands are given, they are displayed on a paperback-sized screen in the centre of the dashboard. The driver can also perform a number of tasks - for instance stopping a track - by pressing buttons on the steering wheel.

The car itself does not store any information from the phone's contact list, so car thieves would not have access to personal details. Similarly, the car does not copy songs from the iPod - it accesses them via USB cable as they are requested by the driver.

In a demonstration given to Times Online, the software displayed a remarkable ability to recognise complicated names - one of the traditional sticking points of voice-recognition software, which has long been hailed as a technology of the future but has often stumbled in practice.

The test car recognised the name of an obscure, Texas-based electro band called Ghostland Observatory and multisyllabic Greek surnames such as Papadopoulou. Even a thick Australian accent didn't stop it recognising a request to play Oasis.

In Europe, where GPS-based technologies such as sat nav are more popular, the technology will synchronise with a maps database so that it can be used for navigation.

The software is so far available in Fords in the US, where it is called Sync, and in Fiats in Europe, where it is called Blue&Me. Microsoft announced earlier this month that the device would also be available worldwide in cars made by Hyundai Kia, but the first Hyundais to feature it are not expected to appear until 2010.

Some models come with the device pre-installed. On others, it can be added to the specification for just under $300 (£152).

Mercedes also equips some models with its own voice-recognition system called Linguatronic, and other independent systems are available as optional extras.

The Microsoft unit works with a wide range of Bluetooth-enabled phones, and Fiat's version of the device can be set to recognise nine languages. Click here for a full list of compatible handsets.

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