"Physically plausible illumination at real-time framerates is often achieved using approximations. One popular example is ambient occlusion (AO), for which very simple and efficient implementations are used extensively in production. Recent methods approximate AO between nearby geometry in screen space (SSAO). The key observation described in this paper is, that screen-space occlusion methods can be used to compute many more types of effects than just occlusion, such as directional shadows and indirect color bleeding. The proposed generalization has only a small overhead compared to classic SSAO, approximates direct and one-bounce light transport in screen space, can be combined with other methods that simulate transport for macro structures and is visually equivalent to SSAO in the worst case without introducing new artifacts. Since our method works in screen space, it does not depend on the geometric complexity. Plausible directional occlusion and indirect lighting effects can be displayed for large and fully dynamic scenes at real-time frame rates. "

http://www.mpi-inf.mpg.de/~ritschel/SSDO/

grab the paper and check out the video.