Martin Carthy uses and recommends a little powered condenser lapel mic from Tandy (Radio Shack in the USA). It costs about GBP 10. The little jack plug is cut off and it is hardwired to a tailpin jack socket. The microphone end goes inside the table right by the soundhole under the top E string, against the brace at that point, pointing across the body towards the bottom E string. The battery compartment goes anywhere convenient near the soundhole.

Feedback is a potential problem but he says it is controllable so long as the monitor is beside your left foot pointing diagonally to your right (ie facing the main neck/body joint of the guitar, not straight at the top).

There is one in his famous Martin. I haven't heard it, 'cos he played our club unplugged, but he says it sounds like a guitar and not something twangy and electric.

At that price you can put one in each guitar!