A new residual function in the inverse problem of equivalent dipole localization methods is proposed which is based on the spatial correlation of the background EEG. This residual has the advantage that it allows the calculation of confidence limits for dipole model parameters. The method was applied to VEP data, and it was studied how the localization precision depends on the recording time of the EEG. It was found that the tangential position of an equivalent dipole can be located at 99% confidence in a region of the order 7 x 7mm for a head radius of 10cm, while the 99% confidence interval of the depth estimate is approximately 1cm, with a recording time of 20 minutes. It was also observed that an EEG recording time of more than 10-15 minutes is needed to obtain stable localization precision estimates.