Due to reach showrooms in mid-2007, the environmentally friendly supermini emits only 102g/km of CO2 - which is 2g/km less than the Toyota Prius.
It's the first of a wave of 'clean' models VW intends to launch over the next decade. Included in the long-term line-up are compressed natural gas (CNG), biofuel and, in 2020, hydrogen fuel cell-powered vehicles.
The new Polo uses a 1.4-litre three-cylinder engine to achieve its low emissions, and returns 72mpg. However, the 78bhp unit will still give 110mph and a 0-62mph time of 12.8 seconds.
To further limit the impact on the environment, the exhaust features gas recirculation, a particulate filter and a quicker-reacting oxidation catalytic converter. The gearbox has also been given taller ratios to ensure fuel consumption remains low even at motorway speeds. And the bodywork hasn't been ignored in the quest for greater efficiency. The most substantial changes are at the front, where designers have introduced a new smooth grille and revised front spoiler - both of which aim to make the car more slippery through the air.
Smaller door mirrors, subtle side skirts and a rear boot spoiler also help to reduce drag, while unique tyres that lower rolling resistance are mounted on specially designed alloy wheels. VW claims that fuel-efficient variants will eventually be offered across its range. A spokesman explained: "The objective is to make Bluemotion the most economical variant of each model series."
Prices have yet to be announced, but the Bluemotion is set to cost more than the standard Polo 1.4-litre TDI diesel.