In this paper, a novel character classification and recognition algorithm is developed and experimented on. Our classification and recognition technique is based on the properties of characters' features, including their intersection, line ending and continuity features. The application of our novel algorithm to car licence number recognition has been tested using the real-time IVP-150 TMS320C50 digital signal processor based video image processing system. In our implementation, a remote camera will first capture the car image, the captured image will then proceed for image segmentation and pre-processing. Subsequently, the licence number will be located and recognised. In general, excellent performance has been obtained and is demonstrated with our experimental results.