I have a suspicion that I missed the boat on this one and the announcement has already been widely, um, announced, but this was the first I'd heard of it, and it seems a valid tool for distance students (though of course you should be the primary provider of reference services for your own students). I tried it out and it worked well. It uses OCLC's QuestionPoint software for chat, and that's that. Nothing else too fancy, though you do get a nice transcript emailed to you after the fact. The librarian who answered my query said they have been pretty busy, with about 80% of the questions coming from the UK, and 20% coming from elsewhere. (originally heard about this thanks to Tara's ResearchBuzz Extra)
Link: Library Journal - UK Offers Free, 24/7 Online Reference.