This report is the conclusion of a workgroup, which the steering group assembled to evaluate the status of Icelandic language technology and to create a five-year project plan. The workgroup suggests that four open core-solutions are created: Speech Recogniser; Speech Synthesiser; Machine Translation System; and Spell and Grammar Checker. These will be developed and adapted to Icelandic to the point where they are fully usable, and used by the public, companies, governmental bodies, and institutions in Iceland. The principal prerequisite in building language technology tools is to have language resources and support tools in place, and the report describes the measures required to achieve this. In addition to the project schedule, suggestions are made as to how it will be carried out, with a description of how similar schedules have been executed in other countries.