The full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details. Abstract. -An impurity-driven magnetic phase transition has been investigated in LaCoO3 at temperatures below that of the thermally induced spin state transition of the Co 3+ ion. We have discovered a saturating component of the magnetisation, which we attribute to previously unobserved interactions between magnetic excitons. These conclusions are confirmed by muon spin spectroscopy which indicates an ordering temperature of 50 K in both the transverse and zero-field configurations. Low-energy muon measurements demonstrate that the magnetic behaviour is independent of implantation energy and hence a property of the bulk of the material. The magnetic exciton formation is attributed to the interaction between electrons bound at oxygen vacancies and neighbouring cobalt ions, and is proposed as the precursor to the magneto-electronic phase separation recently observed in doped lanthanum cobaltite.Introduction. -LaCoO 3 is unique among the LaMO 3 family (where M is a transition metal element) as it undergoes a thermally driven spin state transition. This occurs because the crystal-field splitting of the d-levels of the Co 3+ ions is only slightly greater than Hund's exchange energy, leading to a situation where a small input of thermal energy can lead to the occupation of a higher spin state. Explicitly, a transition from a Co 3+ low spin (LS) S = 0, t 2g 6 e g 0 , state to an intermediate spin (IS) S = 1, t 2g 5 e g 1 , state occurs at around 90 K, although the exact nature of the transition is still a matter of some contention [1][2][3][4][5][6][7][8][9]. However, the low-temperature (T < 35 K) magnetic properties of LaCoO 3 are usually dominated by a Curie-like magnetic susceptibility, which is generally acknowledged to be related to defects. In particular, this "Curie tail" has been ascribed to paramagnetic impurities, ferromagnetic regions at the surface [10], and also to the formation of high spin (S = 16) magnetic polarons in LaCoO 3 [1]. Nagaev et al. [11] have also proposed that the paramagnetic centres responsible for the Curie tail are magnetic polarons, although strictly they should be labeled "magnetic excitons". In this model localized holes (electrons) bound to cobalt ions or oxygen interstitials