When augmented reality first appeared on the iPhone there were two things I asked my programming friends to come up with, 1 – an app that mimics the sunglasses from ‘They Live’ and 2 – an app that translates text when you point your iPhone camera at it. While I’m still waiting for the first one, it was announced today that a new iPhone app called Word Lens by QuestVisual has been released, that translates text not just by taking a photo and producing a translation à la Babelfish, but actually live, in video. Check it out!

This is absolutely amazing if you ask me – especially as it doesn’t require an internet connection to do any lookup. At the moment it translates between English and Spanish for now, and while it’s not as accurate as the video shows, I’m sure that in a few months it will be perfect, and operating in multiple languages.

Founder Good explains the app’s process simply, “It tries to find out what the letters are and then looks in the dictionary. Then it draws the words back on the screen in translation.” Right now the app is mostly word for word translation, useful if you’re looking to get the gist of something like a dish on a menu or what a road sign says. “The translation isn’t perfect, but it gets the point across” says Good.

The iPhone app, which hit iTunes last night,  is the culmination of 2 1/2 years of work from founders Otavio Good and John DeWeese. The $4.99 app uses Optical Character Recognition technology to scan the letters, looks in the dictionary for a word translation and displaying the translation on-screen in real time.

He’s planning on incorporating major European languages and is also thinking about other potential uses including a reader for the blind, “I wouldn’t be surprised if we did French next, Italian and since my mom is Brazilian, Portuguese.”

Babelfish, eat your heart out.