A method of operating an electric power assisted steering system of the kind in which an electric motor applies an assistance torque to a part of the steering system as a function of an assistance torque signal, the assistance torque reducing the force required by the driver to turn a steering wheel, comprises during normal operation generating an assistance torque signal that is dependent on the torque applied by the driver, and during a fault operation in which the torque applied by the driver is not reliably known to the system generating an assistance torque signal that is derived from a first term that has a value that varies as a function of the angular position of the steering relative to a changeable datum, the angular position of the changeable datum being updated in the event that the direction of rotation of the steering changes.