Skype is a well-established voice over IP service that offers free and low-cost phone calls around the world, but one obvious hole so far has been the lack of video calling capabilities.

We looked at past releases last year, when Skype added Skype In (an individual phone number to receive calls from landline and mobile phones), Skype Out (to make calls to landline and mobile phones), Voice Mail and call forwarding to a designated number.

But until Skype 2, it was unable to offer video - a feature long available in major rival MSN Messenger's service.

Once loaded, it's obvious the development team has put in a lot of thought to the feature. When making a call, you can either start the web cam automatically or when you choose to.

When in a call, you can alter the size of the video window or stop the video mid-conversation without ending the call.

The video can be slow to get going. We tried it from several locations, and found although you could begin a conversation immediately, it took about up to 40 seconds for the video to snap in.

Image quality is down to your web cam and generally doesn't impact voice quality. On the couple of occasions it did during testing, simply switching off the video mid-conversation immediately improved the voice quality akin to that of a landline.

This version also lets you group your contacts (for example into business and friends) as well as display mood messages and the time local to your location.
But video is the main benefit - compared to the video capabilities offered by MSN Messenger, Skype is far superior.

For anyone that needs video calling for business or to keep in touch with family, it is an excellent addition to what was already a good Internet telephony service.