  We present an experimental realisation of Hardy's thought experiment [Phys.
Rev. Lett. {\bf 68}, 2981 (1992)], using photons. The experiment consists of a
pair of Mach-Zehnder interferometers that interact through photon bunching at a
beam splitter. A striking contradiction is created between the predictions of
quantum mechanics and local hidden variable based theories. The contradiction
relies on non-maximally entangled position states of two particles.
