Digital photography is great. You can share images with friends over the internet, use them to produce greetings cards, personalise invitations for parties (especially loved by children), use them on T-shirts, your website and in many other ways.

Even if you don't want to keep your images digital in the long term, preferring instead to get prints made, it can be good to take them digitally so you can doctor them and get the light balance just right, remove red-eye, crop out the hand that creeps into the corner of the frame and also keep the negatives in one place to share them more easily.

As more people discover the potential of digital photography, camera sales are soaring. Manufacturers are producing better cameras at more competitive prices and this year has seen the explosion of a new category of digital camera: the low-cost, ultra-small variety.

But can a cheap digital camera deliver the goods? Since there are so many to choose from, how do you go about picking one that fits your needs? Is it for you, or a cheap way for the kids to take pictures? Well, fret not. We've tested nine of the best and put together this guide to help you make a choice.

Image resolution
Top of the list for a digital camera purchase is image resolution. Bear in mind that, if you want to get quality glossy printouts from your digital images, you need to look beyond the budget sector.

None of the cameras in our group pack enough megapixels to rival 35mm film cameras and produce really good-quality printed images at the standard print size.

One way some digital cameras get around their low resolutions is through interpolation. This increases the size of an image using clever mathematical guesswork to create new pixels. For example, a camera with a resolution of 640 x 480 might be able to produce images at 1024 x 768.

The results are usually pretty poor though, and the same effect can be produced using image editing software. In other words, always pay attention to a camera's actual resolution figure and disregard any mention of interpolation.

It's the same story with digital zoom. More expensive digital cameras have an optical zoom that actually moves the lenses for a closer shot of the subject.

A digital zoom simply blows up part of the image to make it look bigger. Again, it's a poor substitute for the real thing and nothing you can't do yourself with an image editor.

Viewing images on-camera
All bar one of the cameras in our selection lack either a flash or an LCD screen for taking and previewing pictures. Many lack both.

A screen is often seen as crucial to digital camera users. It's superb for viewing images on the move and for deleting those that went wrong in order to free up some memory.

But LCD screens use a lot of battery power; something you'll particularly notice when you rely on disposable batteries.

In a features battle between battery life and a screen, battery life may well win, especially when you consider that you can digitally edit images later on if they aren't quite what you expected.

A flash is a more important consideration. You can't really manage without one for most indoor shots and, as parties and other gatherings are the kind of place digital cameras can come into their own, the absence of a flash can be a real nuisance.

Flashes are relatively expensive to build in to cameras and, like LCDs, they eat battery life, hence they are not often included in the lowest-cost cameras.

Many low-cost cameras have a feature called Autobrite. The Logitech Pocket Digital (£119) and Fuji Slim Shot (£80) are two such examples. This feature automatically adjusts brightness for darker conditions and it works well up to a point.

It's particularly useful indoors or when you are shooting a fairly dark image close to the camera with a bright one in the distance, such as a person standing by an open window on a sunny day. But at night or in subdued lighting, it's not so good. Autobrite is handy but should not be considered as a substitute for a good flash.

Ease of use
The key thing about ease of use is that it can be pretty personal. Some people might not like the shutter release button on the front of the camera, as it is with the Trust 500F SpyC@m Flash (£120).

They might also like their camera to look more like a conventional camera than this model does. It's a matter of taste and all we can advise you on is to think about what you like and don't like.

Other features are easier to generalise about. Complex control systems which require multiple presses of a few buttons, or systems that require you to remember a lot of cryptic symbols, are generally a bad idea. Cameras with few buttons tend to be easier to use.

Generally, the less expensive cameras in our selection have fewer features and so by default are easier to use.

The Fuji Slim Shot and Logitech Pocket Digital, although they sit at the more expensive end of our selection, are also to be praised for their ease of use.

Fuji's FinePix (£130) is more complex than the rest but then it is the most expensive and its LCD means that there are viewing and image deletion options to manage, as well as those required to take a picture. Many of its options are controlled using the screen.

Memory and battery life
Many of the cameras in our selection have internal memory that cannot be upgraded. The l'espion, (£40), with just 2MB, is the least well equipped here. While it was a market leader when it appeared last Christmas, things have moved on fast and now 2MB seems pretty paltry. The Blink, which costs the same, has 8MB.

Make sure that the camera you want has the capacity to store enough images between downloads. If your chosen model supports removable memory, check on what is supplied with it. You could add a lot to the cost if you need to buy more memory right away.

We've already covered batteries and how various features deplete them quickly. All we will add here is that, if you are using disposable batteries, they probably won't last as long as you'd like so be prepared to carry spares with you.

Multipurpose rechargeable batteries are an economic idea but, while internal rechargeable batteries tend to last longer, you can't swap them while out and about. It's a trade-off.

Also note that, regardless of whether your images are stored in internal memory or on a storage card, they won't be lost if the batteries do run down.

Extras
With the basics covered, it's time to consider all the extra features a digital camera can include. Even budget models can be surprisingly strong on extras and even the tiny and ultra-low priced l'espion can manage a self-timer, for example.

The Nisis Pocket DV (£80) comes with a tripod, as does the Trust 510FX FamilyC@m (£100). What's the advantage?

Well, both cameras double as webcams and the tripod helps with perfect positioning. The Pocket DV can also record video clips and the tripod can help keep things steady. Video does eat into memory though, and even the Pocket DV with its massive 128MB of built-in memory can only cope with up to 200 seconds' worth.

The Trust 500F SpyC@am (£120) and SpyC@m 300XS (£70) come with non-tripod stands, which keep the cameras more upright but also allow for a tilt. The 300XS also has an additional clip-mount so you can attach it to various objects or a notebook computer.

Sending images direct to a TV via a cable connection can be a handy option if you're on holiday or want to show pictures to family and friends.

It's not a feature you find very often on the most inexpensive digital cameras but the Trust 510FX FamilyC@m (£100) is one model that offers it.

If your camera is likely to spend much of its life sloshing about in a pocket or bag then some protection for the lens, not to mention the case, might be in order.

The only camera in our selection that is fine without a pouch is the very clever Logitech Pocket Digital, which has a sliding aluminium case.

Other models come with a pouch but the neatest of all is a tiny case with a belt loop that comes with the l'espion.

Finally, consider the software. We don't have the space to cover this in any kind of detail here but it is important.

If you already have good digital image editing software, such as Paint Shop Pro, then you might not be bothered about the software that comes with your camera. If you're starting from scratch, however, you might want a capable bundle that you won't need to upgrade very quickly.

To follow up with all these issues on any of the cameras mentioned, read up at the manufacturer's websites. You'll find lots of more detailed technical specifications there.

Final frame
We've looked at a range of digital cameras starting at £40 and rising to £130. The most expensive in our range has both a flash and a colour LCD screen.

But do you need those features in a budget camera? The flash is probably the handier of the two and other cameras in our selection offer that. More important features are image resolution, storage capacity and portability.

Never lose sight of the fact that, at this price, you are looking at fun cameras and not professional tools.

With these points in mind, our favourite is Logitech's Pocket Digital because of its tough case, long-lasting battery that recharges from a USB port, ease of use and cool design. The SiPix Blink is also worth considering. It does go through the batteries but it's small, very easy to use and half the price of the Logitech.

The rise of low-cost digital cameras
We spoke to Michael Smith, the managing director and founder of Firebox.com, a website dedicated to selling gadgets of all kinds. Here's what he told us about the rise and rise of low-cost digital cameras:

"Digital cameras have been our best-selling product since February this year. The l'espion topped the polls first. It recently lost top spot to the Blink but it is holding strong in second place. At the moment we are selling about 3,000 Blinks every month.

"We know that once people have bought their digital cameras they really do use them. We invite people to put pictures on our site to share easily with friends and it is a very popular service.

"We select the best one every month and award a prize of £50 in Firebox.com vouchers. The response has been huge.

"This sector moves very quickly and there are lots of new cameras coming out all the time. Often new models offer better features and greater value for money.

"We are expecting the first entry level small camera with a flash very soon, for example, and also expect to see a camera costing less than £100 with a good-quality LCD screen soon."

JARGONBUSTER

LCD: Liquid Crystal Display. Technology used to create low power, slim display panels.

MB: Megabyte. A measurement of storage capacity, usually for computer memory.

Megapixels: A measure of the level of detail recorded by digital cameras. One megapixel means an image made from one million tiny dots (pixels).

Memory: The computer's temporary storage area. Anything written to memory will be lost when the power is switched off.

Resolution: The amount of detail shown in an image. For a digital camera, it is the number of pixels it can display.

USB: Universal Serial Bus. A standard which allows quick and easy connection of external peripherals such as scanners and printers to your PC.

Webcams: A video camera designed to connect to your PC. It can be used to record video clips, which you can send by email or to transmit images directly over the internet for video conferencing.