In developing countries like Nepal, anaesthetic compressed gases, especially nitrous oxide, are expensive and in short supply and anaesthetic techniques must equally use oxygen and volatile anaesthetics sparingly. We have designed a non-rebreathing anaesthetic system which meets these requirements. An Ambu-E anaesthetic valve and self-inflating Ambu bag connected to a Bain system form a non-rebreathing system which uses ambient air to supplement a mixture of low flow oxygen and halothane. Over 100 patients have been anaesthetised with this system using a balanced anaesthetic technique. The oxygen flow was 2 l.min-1 and the average halothane consumption was 8 ml.h-1. The average inspired oxygen concentration was 34%, and the air:oxygen dilution ratio was 5:1. A graphical analysis of gas flow predicts that the system is almost 100% efficient, in that almost all of the oxygen and halothane will enter the alveoli. Our experience confirms that this is a safe, simple and economical method for inhalation anaesthesia. We recommend it for locations where anaesthetic machines and mechanical ventilators are lacking, and where medical oxygen is in short supply.