The choice of reference stress state as datum for zero lateral strain is identified as a problem inherent in the determination of K0 of sand by laboratory tests. A new, but simple, test method based on strain path testing is presented. This new test method enables a systematic investigation into the influence of a non-zero isotropic reference stress on the measured K0 value. The results of such a study introduces the concept of a threshold reference stress, p′00, the maximum reference effective stress that can be used to ensure the correct determination of K0 value for a normally consolidated condition. p′00 is dependent on the effective axial stress, σ'a, at which K0 is to be measured. The value of σ′a/p′00, however, lies within a narrow range. For an over-consolidated condition, K0 appears to be independent of p′0 provided the preconsolidation stress is significantly higher than p′00.