PoS is being worked on as a replacement to the computationally inefficient PoW algorithm. PoS is not being fully implemented and upgraded on mainnet due to concerns about an issue such as emerging of a set of centralized supernodes (which receive an outsized role in building the new blocks). Casper is the Ethereum community's effort to transition from PoW to PoS.
In the Per Casper protocol, validators (the Ethereum equivalent of miners in Bitcoin) set aside a portion of their Ether as a stake. When a validator identifies a candidate block to build, Ether is bet on that block by the validator. If the block is indeed added to the chain, the validator is rewarded based on the size of his or her bet. Validators acting maliciously will be penalized by having their stakes removed. Casper has two main projects: Casper FFG and Casper CCB.
Casper FFG (Friendly Finality Gadget; Vitalik's version of Casper) is a hybrid algorithm running on PoW but treating every 50th block on the network as a PoS checkpoint. Validators vote on the finality of these blocks and write them into the blockchain. FFG is meant to be an intermediate step in a transition to a complete adoption of PoS. FFG is already running on a test network. It will soon be implemented completely on mainnet.
The Casper CBC (Correct by Construction, Vlad's Casper) is more dramatic. CBC focuses on designing protocols where one can extend local views of a node's estimate of safety to achieve consensus safety. So far, the approach has been merely researched and no release plan is available for making it to Ethereum.