The following is what the U.S. Embassy in London says:
On October 30, 2000, the Visa Waiver Pilot Program was made permanent when President Clinton signed into law the Visa Waiver Permanent Program Act.
Do I qualify for visa free travel?
Most visitors to the United States enter the country as tourists. With the introduction of visa free travel to citizens of 27 countries, it is now possible for many travelers, including British citizens, to enter the United States without a visa under the Visa Waiver Program (WVP). Visa free travel is also available to qualified travelers who enter the United States on business or in transit.
Citizens of the following countries: Andorra, Australia, Austria, Belgium Brunei, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Monaco, the Netherlands, New Zealand, Norway, Portugal, San Marino, Singapore, Slovenia, Spain, Sweden, Switzerland, and the United Kingdom may travel visa free under the VISA WAIVER PROGRAM if they meet ALL of the following requirements:
The traveler is a citizen of one of the countries named above, traveling on an unexpired national or EU passport. Passport holders from Andorra, Belgium, Brunei, Liechtenstein and Slovenia must be in possession of individual machine readable passports in order to travel visa free. For citizens of the other 22 visa free countries, including the United Kingdom, this requirement has been postponed until October 26, 2004. Read more....... A passport indicating that the bearer is a British Subject, British Dependent Territories Citizen, British Overseas Citizen, British National (Overseas) Citizen, or British Protected Person does not qualify for travel without a visa. Note: A passport which states holder has Right of Abode or indefinite leave to remain in the United Kingdom does not qualify for visa free travel;
Traveling for business, pleasure or transit only;
Staying in the United States for 90 days or less;
Plus, if entering the United States by air or sea is,
Holding a return or onward ticket. If traveling on an electronic ticket, a copy of the itinery must be carried for presentation to the United States Citizenship and Immigration Service (USCIS). Note: Travelers with onward tickets terminating in Mexico, Canada, Bermuda or the Caribbean Islands must be legal permanent residents of these areas;
Entering the United States aboard an air or sea carrier that has agreed to participate in the program. This includes aircraft of a U.S. corporation that has entered into an agreement with the Immigration and Naturalization Service to carry passengers under the Visa Waiver Program. Note: other private or official aircraft or vessels do not meet this requirement; and
In possession of a completed form I-94W, obtainable from airline and shipping companies;