Deckman, afraid Le Scaramouche is right -- even though the port-out starboard-home is an extremely popular explanation -- especially here in the UK. Catspaw wrote the following on (coincidentally) another thread dealing with the origins of the brass monkey/balls expression...

As to POSH.....I was absolutely sure it meant port-out,starboard-home until a few months back when on another thread, Sourdough pointed out the following from the American Heritage Dictionary:

"Oh yes, Mater, we had a posh time of it down there." So in Punch for September 25, 1918, do we find the first recorded instance posh, meaning "smart and fashionable." A popular theory holds that it is derived from the initials of "Port Out, Starboard Home," the cooler, and thus more expensive side of ships traveling between England and India in the mid-19th century. The acronym POSH was supposedly stamped on the tickets of first-class passengers traveling on that side of ships owned by the Peninsular and Oriental Steam Navigation Company. No known evidence supports this theory, however. Another word posh was 19th- and early 20th-century British slang for "money," specifically "a halfpenny, cash of small value." This word is borrowed from the Romany word påh, "half," which was used in combinations such as påhera, "halfpenny." Posh, also meaning "a dandy," is recorded in two dictionaries of slang, published in 1890 and 1902, although this particular posh may be still another word. This word or these words are, however, much more likely to be the source of posh than "Port Out, Starboard Home," although the latter source certainly has caught the public's etymological fancy.

Bummer huh?

I found Spaw's message while searching for the following info I had posted in a different thread (but thought Spaw's info was different/interesting enough to be worth posting here again as well):

posh       Swanky. Deluxe. [A direct borrowing of the form but not the sense of Romany posh, half. Brit. Gypsies commonly, if warily, worked with Brit. rogues. Shiv, Romany for "knife", came into Eng. through this association. Similarly rum go is at root Rom go, "a Gypsy thing," hence, a queer thing. Brit. rogues came to know posh in such compounds as posh-houri, half pence, and posh-kooroona, half crown, so associating it with money, and from XVII to mid XIX posh meant "money" in thieves' cant, the sense then shifting to "swank, fashionable, expensive" ("the good things money can buy").]
       NOTE: A pervasive folk etymology renders the term as an acronym of p(ort) o(ut), s(tarboard) h(ome), with ref. to the ideal accomodations on the passage to India by way of the Suez Canal, a packet service provided by the Peninsula and Eastern steamship line. The acronym is said to explain the right placement of one's stateroom for being on the shady side or the lee side of the ship. On the east-west passage it is true, the ship being north of the sun, that the acronym will locate the shady side (though time of year will make a substantial difference). The lee side, however, is determined by the monsoon winds, and since they blow into the Asian heartland all summer and out of it all winter, only the season can determine which side will be sheltered. The earlier dating of posh as glossed above sufficiently refutes the ingenious (but too late) acronymic invention. As a clincher, veterans of the Peninsula and Eastern, questioned about the term, replied that they had never heard it in the acronymic sense.

-- from A Browser's Dictionary
   A Compendium of Curious Expressions & Intriguing Facts
   by John Ciardi (published in 1980)

Cheers,

YY