Making a "Recovery Partition" ??

Hiya people..

I was hoping some expert here would share with me some details as I like to make a "System Recovery Partition" on a external drive. I use my MacBookPro on the road all the time and in the past it's known to happen, and often it happens at the worst time.

So, my question is:
Does anyone know how to make a boot-able recovery partition, allowing me to boot in OSX then reinstall OSX from this partition to the internal drive (assuming the hard drive hasn't died), along with all my applications.. I know some people make a backup of their system DVD.. but I don't wanna be carrying around a pile of DVD's.

I tried copying the System disks to the external drive, but when you click on the system install, it forces the system to restart... This is the bit at bugs me!

Other people have suggested i clone the system but my external drive is way smaller than the internal.. So a clone isn't a viable option. And, I'd sooner have a recovery partition, this way I have the option to rebuild the System, minus any bugs which might occur.

Thanks, in advance.