To accurately determine the location of mobile device a multi-phase procedure incorporating mapping and location determination phases is suggested, wherein covered area estimation comprises (i) estimation of base station location, (ii) estimation of transmission range, (iii) estimation of signal map and/or (iv) estimation of area type. The actual location of the mobile device (10) is determined from the covered area estimation based on relative comparison between the actual environment data and estimations (i)-(iv) and weight numbers resulted from the comparison. During the both phases a database is stored in server (14) and updated whenever new environment data is received. The vertical position, or ‘elevation’, of mobile device is further estimated based on vertical level information associated with the covered area estimations during the mapping phase.