  In this paper we present high spatial resolution radio images of the puzzling
binary system beta Lyrae obtained with MERLIN at 5 GHz. We find a nebula
surrounding the binary with a brightness temperature of 11000+-700K
approximately 40AU across. This definitively confirms the thermal origin of the
radio emission, which is consistent with emission from the wind of the B6-8II
component (mass loss of order of 10^-7 Msun per year), ionized by the radiation
field of the hotter companion. This nebula, surrounding the binary, is the
proof that beta Layrae evolved in a non-conservative way, i. e. not all the
mass lost by the primary is accretted by the secondary, and present
measurements indicate that almost 0.015Msun had been lost from the system since
the onset of the Roche lobe overflow phase. Moreover, the nebula is aligned
with the jet-like structures inferred from recent optical measurements,
indicating a possible connection among them.
