An upgraded version of the ECMWF 4D-Var system was implemeted in January 2003. The aim of the upgrade has been to improve the accuracy and the efficiency of the algorithm. The increased efficiency has facilitated the utilisation of rapidly increasing numbers of mostly space-based observations (e.g. ATOVS AIRS), and paves the way towards higher-reolution analysis increments (from T159 to T255) in the coming years. Further developments include preparation for cloud and rain assimilation. Results will be shown to demonstrate that clear benefit is obtained from time series of frequent data and tendency information. Recent improvements in short-range forecast performance will be illustrated and discussed.