Ben Delo, a computer science and maths student at Oxford University, faced a tough choice when planning this year's summer holiday: spend three weeks travelling around Thailand, or work intensively for 12 weeks to solve a computing challenge.

At the last minute, Delo opted for the latter, travelling to IBM's research labs in Hursley to make up a team of four that would attempt to solve the problem of how to automatically fix broken links on a web site.

Twelve weeks later, the team had built a working prototype application called Peridot and filed various intellectual properties for possible patents.

Peridot, named after a mythical gemstone that helped people find lost things, solves a common problem in sprawling corporate web sites and intranets - updating links to other pages that have been moved or changed.

'It helps people find content on web sites that have been lost, by automatically checking for changes, searching for where pages have gone, and updating the links,' says James Bell, one of the programmers on the Peridot team.

Over the summer of 2004, about 200 students across the world were grouped into four-person teams to take on a diverse range of challenges.

A team in the Netherlands built an application that listens to contact centre conversations, picks out relevant keywords and automatically prompts the call centre agent with possible answers.

In France, another team built a tool for retail outlets that maps data about a particular customer's shopping habits and pops up advertising on his or her shopping trolley relevant to their usual choices.

The students are all part of an innovative summer internship programme, Extreme Blue, that is the brainchild of IBM.

For the first time this year, the supplier revealed the inner workings of the internship that has swelled in size since its 1999 inception.

At the outset, just 24 computer science students gathered at an IBM laboratory in Cambridge, Massachusetts for a summer's work.

Today, more then 4,500 students vie for nearly 200 places at 12 labs in the US, Europe, India and China.

Jane Harper, director of IBM's university talent programme, says the programme works so well because it involves the best people, working on the best projects, in the best places.

'How do you convince the best technical and business people to come and work with you? You need to wrap the best people, projects and places up into a total "wow" experience,' she says.

'The best won't come and work for you unless they think what they're doing is going to matter, or if it's going to be significant, unless they get to work with the best.'

Bart Fehmers, general manager of IBM Netherlands, says Extreme Blue is all about innovation and how to apply it in context.

'It's invention in application. This programme shows that it can be structured, packaged into a 12-week programme. We give participants a goal and they go for it,' he says.

Starting in the autumn, Extreme Blue co-ordinators across the world begin the candidate selection process for the following summer, working with internal 'mentors' to scope possible projects for the next group of interns.

Once projects are outlined, recruiters start polling universities to identify promising business and computer science candidates.

Following the initial screening process, students start an intensive two-round selection process, where technical skills, experience and enthusiasm are tested before project leaders make the final selections.

Students are linked into groups of four, comprising three technically-skilled workers and a business student, with groups selected according to the skill sets that are appropriate to each project.

'It's what this is all about, we work as a team, not as individuals, to obtain solutions. In usual internships you get to work with someone in an organisation, here we get to work as a team,' says Philipp Offermann, a combined business and technical student on the Peridot team.

At the end of the 12 weeks, the payoff to IBM is significant in a number of ways.

First, it gives the firm direct access to the best student brains on the market, which provides a network of possible recruits, as well as an opportunity to impress them of the merits of working for a blue-chip multinational firm.

Second, the process provides a conveyor belt of hot new ideas, intellectual property and potential products.

Last summer, the group filed for 98 patents - in 2004, says Harper, 'we're going to exceed that number.'

The 50-plus project goals established usually result in a success rate of about 45 per cent, with the resulting work being incorporated into existing products or fine-tuned into marketable products ready to go to market.

'We don't want a 100 per cent hit rate. If we got that, it would mean that we didn't set our goals high enough, or try ideas risky enough,' says Harper.

For the students involved, the three-month programme gives them a chance of a job offer from one of the best-known employers in the world.

For those who walk away from the summer to finish their degrees, their CVs have been bolstered with experience that practically guarantees them a role in a technology company of their choice.

Not to mention an experience that they will never forget, and a new network of contacts that they will keep into the future.

'It's been a great opportunity,' says Bell. 'We've learned about IBM, and gained experience in a range of technical and business areas.'

But perhaps it's Delo that gives Extreme Blue the ultimate endorsement: 'It was worth cancelling my flight to Thailand for this.'