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So far, the computer has been able to recognise ten words and is accurate more than eight out of ten times. Bradley Greger, a bioengineer who led the research at Utah University, said: "We were beside ourselves with excitement when it started working.
"It was just one of those moments when everything came together. I would call it brain reading.
"We hope that in two or three years it will be available for use by paralysed patients."
Patients suffering from 'locked-in' syndrome which can occur after a stroke, disease or injury are unable to communicate verbally and, like Stephen Hawking, are forced to use blink of an eye or twitch of a finger to choose the words they want read out.
Professor Greger said: "We need to be able to do more words with more accuracy before it is something a patient really might find useful.
"But even if we can just get them 30 or 40 words, that could really give them such a better quality of life.
"We now need to refine it so that people with locked-in syndrome could really communicate."
Professor Greger and his team realised that the same signals are produced by the brain when thinking words as saying them aloud.
By recording the signals in the brain when words were being thought and then spoken aloud, they were able to match the them with a 76 to 90 per cent success rate.
Professor Greger believes that it will not be long before a computer is developed that is able to translate every thought into normal speech.
He said: "This is proof of concept.
"We've proven these signals can tell you what the person is saying well above chance."
What do you think this technology could mean for people in the future? Leave your comments below.