Using OpenSusE 11.4, this is what I want to do:-

new user is created using webmin with auto create mysql user.
user logs in using SSH (on none standard port)
at the user prompt is typed mysql -p
user enters password
if show databases; is typed user can not see any other DB except his own, if no user DB then user only sees blank list, and can not even see the system DB's

user types create database <name>;
then user can only see the DB just created, and no other.
user can then edit the newly created DB, or even use drop database <name>; or create more but ONLY see and edit those that the user created, regardless of the name used to create the DB.

Is this possible to perform automatically, whenever a new user is created.

Sorry if I misunderstood your question so let me rephrase it. You craeted one user accunt using webmin. Now when the user logs in using SSH and run the MySQL command with -p he gets logged in mysql.
Now you want him to see only those databases that he created and he can modify/delete those databases only?

For the above, the solution is mysql GRANT command on those databases for that particular user and host from which he will connect.You have to login as root user in MySQL to issue GRANT commands.

No, you didn't misunderstand, that is precisely how I wanted it, but using GRANT, a DB has to have been created in the first place to grant that user the right perms, but I need to have the perms so that even if the user hasn't yet created a DB, he/she only sees an empty list when using 'show databases;' and when he/she creates the first DB (regardless of what name the user chooses for the DB) and then subsequent DB's, he/she can only see those that were created by that user, and if that user has created only 1 DB, and then uses 'drop database <name>;' which would result in an empty list when viewed, much like when a hosting company allows creation of DB's.

If it is possible, how would it be done?, I know enough mysql to create, drop, show, etc etc, but 'granting' is a bit more advanced.