There is a need for low-cost switching and proportional electro-hydraulic valves with low contamination sensitivity and good reliability. In an attempt to meet this need, a novel electro-hydraulic floating double-disc valve has been developed to the stage where it can be used to control hydraulic cylinders or motors directly. As the valve is significantly underlapped, problems still remain in achieving adequate hydraulic stiffness in the proportional mode of operation. The valve operation, which relies on the complex interaction between fluid and electro-magnetic forces acting on the valve discs, is described and a theoretical model of the fluid and electro-magnetic characteristics of the valve is presented. The theory shows satisfactory agreement with experimental data. A pre-production version of the double-disc valve has been designed and manufactured and it incorporates ideas for manufacturing cost reduction while at the same time conforming to CETOP 3 international valve port standards. This valve has been successfully tested as a switching or proportional device when controlling two different cylinders. Proportional control of the valve is achieved using Pulse-Width-Modulation technique. British Technology Group and University of Surrey have applied for a patent on the valve. The patented floating-disc valve has the following features: (a) 3 way or 4 way 2-position or proportional action with minor changes to produce the two types of action, (b) cartridge construction with interchangeable components, (c) low contamination sensitivity, (d) few critical dimensions, (e) no sliding surfaces, (f) CETOP valve port configuration and (g) potentially capable of operating with corrosive or non-lubricating fluids.