We have investigated an inorganic lithium battery system in which LiCoO2 is used as the positive electrode and lithium, intercalated into graphite, serves as negative electrode. The conducting salt is lithium tetrachloroaluminate (LiAlCl4). The electrolyte is based on SO2. It has been shown that a layer of lithium hydroxide is present on the surface of the lithium cobalt oxide. This has a negative impact on the stability of the electrode. To improve stability, we have developed a purification process for removing the lithium hydroxide from the surface of the positive electrode. After purification the cells show no significant change in either capacity or internal resistance when cycled. Up to 70% of the theoretical capacity of electrodes which have been purified in this way can be used without any negative effects being observed. To prevent the deposition of metallic lithium leading to a hazardous situation, a new safety concept was developed whereby local short circuits are allowable. Safe functioning of the new concept has been demonstrated with tests on complete cells.