We propose a scheme to generate a large Kerr nonlinearity based on electrom
agnetically induced transparency in a single atom placed in a high-finesse
microcavity. We perform a thorough analysis of the system dynamics using a
dressed states approach. This system is shown to create a photon blockade e
ffect equivalent to that for an ideal Kerr nonlinearity as recently propose
d by Imamoglu et al 1997 Phys. Rev. Lett. 79 1467.