Error in spdep: system is computationally singular (lagsarlm)

I am trying to estimate a SAR model with the lagsarlm function:

SAR3nn <- lagsarlm(formula=formula(mod1),listw=list3nn.listw,type="lag",
method="eigen", data=d)

but I saw this message:

Error in solve.default(inf, tol = tol.solve) :
  system is computationally singular: reciprocal condition number =
5.74163e-27

It happens with both a k-nearest-neighbors matrix and with a distance matrix.
If I opt for a spatial 2sls model, the result is the same. I must say that
in the formula I have a variable and its square, which are very highly
correlated (about 0.9). The IV model works if I drop the squared variable,
while the lagsarlm still tells me that the system is singular.

Does anybody can help me? Thank you so much!

Paolo

Paolo Veneri
Dipartimento di Scienze Economiche e Sociali (DiSES)
Universit? Politecnica delle Marche
Piazza Martelli, 8 - 60121 Ancona (Italy)
Tel. +39 3392672827