Imagine you are standing outside a restaurant, trying to decide whether it is worth a visit. Rather than rubber-necking the diners’ dishes, you pull out your mobile phone, point the camera at the building and instantly view its menu and reviews. If anyone inside is using Twitter, you will be able to see what they are tweeting about. What’s more, the information is displayed on top of a video image of the restaurant.

The technology is being billed as the biggest leap forward since GPS sat nav revolutionised mapping, and is being pioneered by Sprxmobile, a Dutch firm that hopes to launch it on suitable phones in Britain this year. It doesn’t work only on individual premises: you can point the camera up a high street and the image on the screen will be overlaid with data that pinpoint, for example, ATM bank machines, bars and shops. If you want more information, you can use the touchscreen to highlight a shop and bring up details of special offers. InGear tested a limited version of the software last week and it worked well.

The software is called Layar, and it works by using the phone’s GPS and compass to establish your location and which way you are facing. It can then go online to work out what is in front of you, searching databases for details of, say, a local business and plotting them onto the screen. The camera is simply a handy way to show the information. “The live camera view is only there for your benefit to make it easier to see what’s around you. The software doesn’t need it to work,” says Maarten Lens-FitzGerald, a founder of Sprxmobile. Some of the features of the software are already available on standard mobiles. The difference with Layar is that it can display data on a live camera view rather than as a map or a list — and from different sources at the same time.

This ability to overlay information on a mobile phone’s live camera image is termed “augmented reality” (AR). The best-known such program is Wikitude, a virtual tour guide: when you point a suitable handset at a landmark, it shows relevant facts from Wikipedia, the online encyclopedia.

The Layar program already works in Holland, where it has five “layers” — or sources that it uses to mine information. These include a Dutch equivalent of Facebook. The potential for the software to tap other sources is limitless: for example, it could access the Times Online database of restaurant or film reviews.

The only phones able to run this software are those with Android, the Google-backed smartphone operating system. So far, this is restricted to a few models from HTC but more are expected soon. The new iPhone 3GS also has the hardware but Apple has not allowed developers to create apps that use a video feed from its camera.

Some software firms have jumped the gun and created AR titles that can be run on a 3GS iPhone. These include Twitteround, an app that shows the location and latest tweets of local Twitter fans, and Nearest Tube, which indicates nearby stations. In either case, the iPhone must be “jailbroken” — the software tweaked so it will accept apps not approved by Apple — which could invalidate its warranty.

If you have an iPhone, though, don’t give up hope of being able to use something like Layar. Last week Apple paved the way for such AR programs to become legitimate — a rare example of the corporation bending to the will of third-party developers and a testament to the power of this software.