The project is being run by the Swedish Institute - a promotional body which works alongside the foreign ministry.

Institute director Olle Waestberg said the virtual embassy would reach many young people and provide information about Sweden.

Second Life has about three million users worldwide, who create and develop virtual characters - called "avatars".

Several real-world companies have created virtual shops in Second Life.

The Swedish Institute says the embassy will not issue passports and visas, but it will inform users how to get them in the real world.

Virtual world Second Life just surpassed two million registered users, exactly two months after it hit one million residents. Yes, the churn rate is high and only 829,537 have logged on in the last two months, but that is still phenomenal growth.

The question is, Can Second Life get enough people to come back a second time or more? If $850,000 is truly changing hands every 24 hours and that money can be taken out of Second Life, then I think the answer will be yes.

To date, Linden Lab has doled these real names out on a very selective basis. Many "Second Life" residents have been asking about the company's policy, but to date it has been mum, largely because it didn't seem to know what it planned to do.

Now, according to an internal source, Linden Lab has finally settled on its plan for real names. And if you're a single mother on a budget, you probably won't be benefiting.

That's because the company has decided, CNET News.com has learned, to charge individuals who want a real last name a $100 setup fee and a $50-a-year maintenance fee. Companies that want their corporate name can have unlimited accounts for a $1,000 setup fee and $500 a year.

That means that we'll be seeing more instances of companies like Sun populating the world with last names like "SunMicrosystems."