One of the biggest problems facing gadget designers these days is how to create a big screen on a small device. Watching a movie on a video-playing iPod, for example, will send you cross-eyed before the end of the opening credits. Fortunately, we’ve seen the solution – a tiny LED projector.

The Digismart microprojector is currently in development stages, but this week we travelled to a secret location in London to get a sneak peak at the prototype.

We can confirm that it’s as small as a child’s thumb yet can project an A3-sized movies or still images onto any nearby surface – and you can see the projection even with the lights turned on.

Digismart is being developed by an Australian company called Digislide which claims to already have agreements in place with a number of well-known laptop and mobile manufacturers that will lead to the projector being built into smartphones and ultra mobile PCs in 2007.

Because the projector has no moving parts, it’s remarkably robust, and the use of LED lights means power drain is reduced – according to its designers, one minute of projection time will drain the equivalent of four minutes of talk time from a phone battery.

Digislide also hopes to have a standalone microprojector available to buy before the end of 2006 – for less than £200. We’ll keep you posted…