This illusion was created by David MacDonald. He describes the process,
"All my images are made the same way. I create a "matrix" in CorelDRAW according to strict rules of perspective, except for the false connections. This is then brought into Photo-Paint where it is "rendered" with purpose-taken, digitally photographed textures and objects. A print-out of the matrix is used as a reference guide during photography to help ensure that the objects are photographed with the correct point of view to fit."
This illusion took "in the region of sixty purpose taken photographs."
A wonderful blend of photography and digital imaging.

Update: David MacDonald recently put launched a new presence on the web called
Cambiguities, check out his other amazing creations.
READ MORE - The Terrace Optical Illusion