We've always dreamed of perfect places: Eden, heaven, Oz - places over the rainbow, beyond death and loss.

Now, through computer technology, we can inhabit those worlds together. Each week, between 35 and 50 million people worldwide abandon reality for virtual worlds. In Boston, Massachusetts, a group of nine disabled men and women inhabit one virtual body, which frees them from their lifelong struggle to be seen and heard. The Pentagon has begun to develop virtual worlds to help in real-world battles. In Korea, where one particular game has 8 million residents, virtual violence has spread into the real world. Fortunes have been made, and mafia gangs have emerged to muscle in on the profits.

In these new computer-generated places, which at first glance seem free from trouble and sorrow, you can create a new self. With the click of a mouse you can select eye colour, face shape, height, even wings. You can build houses, make and sell works of art, earn real money, get married and divorced. On websites like eBay, people sell virtual clothes and rent virtual property for real cash - for a total of GBP400 million worth each year.

Tim Guest takes us on a revelatory journey through the electronic looking-glass, as he investigates one of the most bizarre phenomena of the 21st century.