A car hire scheme aimed at city-dwelling professionals for whom owning and parking a car is more nuisance than convenience is to be extended from London to a network of cities.

Streetcar, almost two years old and a still relatively little-known commercial venture, is modelled on fast-growing schemes on the US east and west coasts which have more than 75,000 users. Steve Case, founder of AOL, the online service provider, has bought a majority stake in California-based Flexcar, one such scheme, through through his Revolution investment fund.

The British venture, founded and run by Andrew Valentine, a former P&O Nedlloyd executive, and Brett Akker, an entrepreneur, operates 42 car depots in London and plans to expand to Brighton, Southampton, Bristol and Oxford.

The working of the scheme is simple. Users take out a life membership for £25. They are issued with a personal smart card, which unlocks any of a fleet of almost 100 Volkswagen Golfs with internal smart car readers, which record length of time used, for billing.

Use of the cars is charged at £4.95 for the first hour and pro rata for each successive 30 minutes' short-term usage. The £35 charge for 24-hour use and £195 weekly fee are no more than competitive with most car rental concerns. But they had the advantage of requiring no paperwork, queues or journeys to rental operators, said Mr Valentine.

While Streetcar has yet to file latest full-year operating accounts, Mr Valentine said the company had become profitable by the end of June, less than 18 months after the scheme had first gone live. "It's exceeded the expectations even of us optimists as starters of the business," he said.

Streetcar projects similar growth to that experienced by both US companies, with the number of users increasing to 7,500 - entailing a £2.5m turnover - by next September and 20,000 in 2007.

Mr Valentine acknowledged that the success or failure of the venture would depend on car availability being adequate to users' needs. "The golden rule is that there must be 95 per cent availability at the depot nearest each user, and 99 per cent if the next closest depot has to be used. Every depot is within five or a maximum 10 minutes' walk of another."

The vehicle fleet is expanded automatically with stepped increases in user numbers.

The company claims that each Streetcar is estimated to replace an average of six privately owned cars, with six out of 25 users not buying or replacing their personal cars.

Statistics from the Automobile Association show that the average annual cost of owning and running a similar Golf, with similar use to Streetcar is £2,749, compared with usage charges of about £700.

Mr Case's Revolution fund investment in the US operation is based on calculations of a tenfold growth in the number of users within the next five years.

The concept began as a community venture in Switzerland, Germany and the Netherlands before crossing to north America to become commercial ventures several years ago.

The British scheme stands to receive a boost from government policy to support car sharing by making it an integral part of local authorities' transport and planning policies - in some cases making consents for new residential development conditional on car-sharing provision.