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This paper deals with a low cost solution to obstacle avoidance for a mobile robot using just a single ultrasonic sensor. It allows the robot to navigate smoothly in an unknown environment, avoiding collisions, without having to stop in front of obstacles. The obstacle avoidance process is made up of three distinct stages - the mapping algorithm, the core obstacle avoidance algorithm, and the steering algorithm. The mapping algorithm takes the raw ultrasonic sensor readings and processes them to create higher resolution maps from the wide-angle ultrasonic sensor. The obstacle avoidance algorithm is based on the potential field theory which considers the robot to be a test charge that is repelled by all the obstacles around it, and which moves in the direction of the resultant of the forces acting on it. An algorithm which steers a mobile robot based on the differential drive system is also discussed.