Let’s be honest. Most of us like the idea of caring for the environment and saving the planet — providing we don’t have to make compromises or pay extra for it.

When it was introduced here in 2000, the Toyota Prius was for serious environmentalists only. The first hybrid-powered saloon car to become generally available, it presented some complex technology, switching automatically between petrol engine and electric motor depending on the driving conditions.

It was one of the cleanest and most economical cars on the market but wasn’t fast or pleasing to drive, looked dumpy and, at £16,405, was too expensive to make a logical case for itself — even if, to begin with, its maker lost money on every one sold. Toyota has sold 120,000 Priuses so far, mostly in Japan, but also to an influential group of eco-friendly celebrities in the United States. Just 391 were sold in Britain last year.

However, the company has clearly learnt a lot from the experience, and the second-generation Prius that goes on sale here in January is most of the things that the original was not. It is a larger five-door hatchback with a smart modern style and exceptionally good aerodynamics that will do 100mph and also has lower emissions and improved fuel economy — 65.7mpg on the combined cycle (over a mix of town and country driving). The new Prius is top, or rather bottom, of the carbon dioxide emitting league, with an overall figure of 104gm/km, which is better than the most efficient small diesels.

I can see the new Prius appealing to what the marketing people call “early adopters” as it includes all kinds of intriguing features such as a brake-by-wire system, electric air-conditioning and a button for all-electric drive, in which it runs smoothly and silently up to 35mph.

In Japan it can also have an automatic parking system, which reverses the car into a parking space. That won’t be offered here because it works properly only if the space is at least 20ft long; in crowded Britain there are not many kerbside parking spots as big as that.

For all its under-bonnet complication, the Prius could not be simpler to drive. There is no clutch pedal and a tiny lever next to the steering wheel selects forward or reverse. The steering, with electric power assistance, is light — too light — and the car, which sets off running on just electricity, starts and stops the petrol engine almost imperceptibly, depending on demand.

A display on the dashboard screen shows from where and to what the power is flowing — engine and/or electric motor to the front wheels, or from engine or the wheels (when slowing down or braking) via the generator to charge the batteries.

The new Prius gives a bigger role to the electric motor, which alone is as powerful as the petrol engine from a small car. Apart from driving the Prius on its own, the motor acts as an electric supercharger for the 1.5 litre petrol engine. With the two power plants working together thus, it can accelerate from 0-60 mph in 10.5sec.

One snag is that if there has been a high demand on the batteries, full acceleration is not available. This is because the system has a primary duty to keep the batteries charged; although the Prius can run as an electric car, there is never any need to plug it into the mains.

I have driven the new Prius on the road in America and at Toyota’s Higashi-Fuji test track in Japan. In both situations it showed itself to be adequately quick, even spritely, and although the springing is soft to provide a comfy ride, it handles tidily.

Inside, Toyota has made a good attempt to give this futuristic car a “designer” look and feel. Although the seating position is low, as in a conventional saloon, and there is plenty of room for five, the deep windscreen, centrally mounted electronic instruments and display screen and plethora of cubbyholes and storage spaces are more like an MPV’s.

Toyota’s intention is that its new-generation hybrid should give the performance of a 2 litre diesel engine in a car of similar size such as its own Avensis. And although it is more expensive to produce, the company decided that it should be sold at about the same price. The new Prius starts at £17,495 but that is reduced by £1,000 from a government PowerShift grant to encourage alternative-fuel vehicles (the same classification exempts the car from the London congestion charge). And if you are worried about the reliability of its technology, Toyota gives the reassurance of an eight-year/100,000-mile warranty on the hybrid system.

If you like the hybrid idea, at present there are only two choices — the Prius and the cheaper and outwardly more conventional Honda Civic IMA. The new Prius is bigger, faster and more sophisticated: green without compromise.

VITAL STATISTICS

Engine type Four-cylinder, 1497cc, plus electric motor
Power/Torque 76bhp, 82 lb ft (petrol) / 57bhp, 295 lb ft (electric)
Transmission CVT automatic, front-wheel drive
Suspension (front) coil springs, double wishbones, anti-roll bar (rear) coil springs, torsion beam axle
Fuel/CO2 65mpg (combined) / 104g/km
Acceleration 0 to 60mph: 10.5sec
Price £17,495 (not including £1,000 government grant)
Verdict Green without the compromise; a stylish full-size car that claims to be the cleanest on the planet