"I only hope that we don't lose sight of one thing - that it was all started by a mouse," said Walt Disney, referring to his most famous cartoon character, Mickey Mouse.

These days the animation world is more likely to be inspired by a computer mouse than Disney's original creation.

In the mid-1990s, the skilled Irish ex-employees of collapsed US-owned firms such as Don Bluth Studios set up their own independent companies. Sophisticated digital software has allowed these smaller, high-tech companies to thrive.

The industry has changed "dramatically" since Dublin-based Monster Animation was founded in 1995, according to Mr Gerard O'Rourke, the company's managing director. "Disney would still be the leading light in the feature film business but studios like Fox Animation and Warner London that used to subcontract parts of the films out have closed," says Mr O'Rourke.

"The television side is still strong, with The Simpsons, South Park, Rugrats and so on," he says.

With the help of a development loan from the Irish Film Board, Monster is currently planning a cartoon series called The King's Story, aimed at four- to seven-year-olds, which it hopes to sell to broadcasters in Britain, Scandinavia, France and Germany.

Often, pre-production work - scripts, voices, storyboarding and design - is done in the home country, then the animation completed by skilled teams in Far East countries, who work faster and for less.

"What is different about The King's Story is that it is all done completely digitally and will all be produced in Dublin," says Mr O'Rourke.

However, animation remains both a labour-intensive industry and painstaking art. Once the finance is secured, it will take a year for 15 animators to complete 26 episodes of The King's Story, each 11 minutes long.

"The creative element of the work cannot be mechanised," explains Mr SΘamus Mulligan, managing director of Galway-based production firm Magma Films.

"A series can take a year to 18 months to develop and then a further 18 months to produce, so much of what we are working on now won't actually be on screen until 2005."

Magma Films has produced long-running animation series such as Norman Normal, Pigs Next Door and Loggerheads, sold to 42 countries worldwide. Irish broadcasters are supportive, says Mr Mulligan, but as 26 half-hour episodes would cost about 8 million (£6.3 million) to produce, international production and distribution deals are vital to recoup investment.

The fact that it is easily dubbed means that there is a strong European market for animation, with content-providing companies attending festivals such as MIP in Cannes to sell products, make contacts and sign co-production deals.

New technology has streamlined production while also providing a new platform for animated products.

One young Irish animation company, Boulder Media, has signed a syndication deal with Paramount Television in the US to broadcast its series, Bird on a Wire, which was first released on the Internet.

"It proves our work has the quality to cross over from the Web to TV and that is something we aim for," says Mr Alan Quigley, Boulder's managing director. "The deal is definitely important in terms of public relations and will hopefully open doors for us here in Ireland."

Global links and partnerships are "absolutely totally essential", agrees Mr Cathal Gaffney of Brown Bag Films, but the doors back home aren't always kept wide open. "Ireland is too small a country. I've just got my fourth rejection letter from RT╔, and it says that unfortunately, animation is not yet a genre, so RT╔ does not have a budget to commission it," he says, baffled. "I'd love to know what they think The Simpsons is or half of Den 2."

Employing six full-time people as well as freelance animators, Brown Bag Films has produced a number of animated short films.

One of these, Give Up Yer Aul Sins, won both the Best Irish Short and Best International Film awards at the Cork Film Festival last month, while Buena Vista has picked up another short, Racism, for distribution before Christmas.

The rest of Brown Bag's business is divided between producing wWeb animation, e-learning projects and advertising, with clients as diverse as the Department of Environment and Albany Home Decoration stores. Advertising can be an ideal market for companies of this size, requiring only a small team.

But with a global downturn in the money companies are setting aside for advertising, it might be expected that animation companies could suffer. However, most are optimistic.

"I suppose you always have to have a positive outlook," says Mr Gaffney. "Advertising is only one part of our business and, as animation is so much cheaper than live action, it may not be affected by a downturn. But you have to generate your own ideas, whether the country is in recession or not."

Advertising is "a very hard market to break into", according to Mr Quigley of Boulder Media. He describes the sector as "the next step" for the self-funded company, which is currently working on Dustin's Christmas video and an online version of Podge and Rodge.

Monster Animation's claim to fame is that it animated part of Madonna's music video, featuring Ali G, but the company also has a client base of Irish advertisers. Its most recent commercial is a 30-second television ad for Move Over Butter.

"Some advertisers use animation because they want an animated ad. For others it is because they don't have the budget for live action or it's not possible to show the effects they want in live action, unless they go to ILM[Industrial Light & Magic] in America and have a couple of million to spend", explains Mr O Rourke.

" Since September 11th, we might have expected more companies to choose the cheaper option but that hasn't happened yet. In the New year though, they may decide to look into a more cost-efficient style of advertising."

If animation is relatively cheap, it is also a cheerful medium, lending itself to satire and slapstick. The industry's ground-breaker, The Simpsons, is now not only the longest-running prime-time animation series in history but the longest-running show still showing in the US. " An awful lot of people pigeonholed animation as just for kids but it's become a prime-time product now", notes Mr Gaffney at Brown Bag. " There's king Of The Hill, Futurama and God, the Devil and Bob. It's another medium."