It's been around for a long time.
see http://www.caa.co.uk/docs/810/Mode_S_June07_A4.pdf for the latest as of June 2007.
I suggest it should be read completely for better understanding but I quote
>Q: Any other impact on operations outside CAS?
>A: Apart from TMZs, operations in Class G airspace below FL 100 would be unaffected by Phase 2.
TMZ = Transponder mandatory zone
i.e. outside controlled airspace and below 10000'
Phase 2 ends in 2012.
The CAA have also stated that there will be no enforcement where a technical solution is not viable. In other words, if you have no power supply you can't be expected to fit an electrical system just so you can fit a transponder (which you couldn't fit anyway unless you are a licenced avionics engineer), and if there are no available battery powered transponders (LPST) then you can't be expected to carry one. At the moment there are no commercially viable battery powered LPST's available and the last one I saw at a show which was meant to be portable was as long as my thigh! and about 6" square. Not particularly portable!
Martin