The future of motoring undoubtedly lies with vehicles that can deliver all that is asked of them in the most fuel-efficient way. Electric cars are all well and good if you want to potter into town and back but practically useless if you are driving 300 miles with four people on board.

For that particular challenge the options are more conventional. Hybrids, combining petrol and electric power, are making some inroads into the market, but for most it is still a straight choice between petrol and diesel.

And when it comes to diesels, Mercedes is an expert, manufacturing them long before they became an attractive option in the UK and now at the forefront of their development.

The new E-Class is no exception with a choice of four diesels all branded under the BlueEfficiency label which combines a variety of technologies and parts, including brake energy recovery and an aerodynamic radiator grille.

The car on test included the most powerful six cylinder, 3.5 litre version. From this I expected better than average performance and reasonable economy that would fall significantly short of the average two-litre diesel saloon on account of its size. I was wrong on both counts.

Anyone expecting a diesel to be lacking in performance and refinement compared to a petrol equivalent is in for a surprise if they drive this car.

The power seems limitless and is delivered in a surge that contains no sign of turbo lag. You sweep to 60mph in what seems like a blink of an eye, and a couple of seconds later you are easing back on the throttle to keep yourself within the legal limit.

All delivered with barely a murmur from the engine which ticks over at 2,000 rpm at 70mph.

To put this in context, I managed a trip to Teesside that normally takes about three hours 20 minutes on a very good day in under three hours. This did not mean I was thrashing up the M1 at full tilt. But the effortless cruising ability and the capability of accelerating from trouble at any speed slashed the journey time.

And just to prove the point, I managed a similar figure in much heavier traffic on the way back.

But what about the fuel consumption? Surely 3.5 litres of Teutonic muscle under the bonnet means the Merc is going to be a thirsty beast?

Not a bit of it. If the onboard computer is to be believed, I achieved a return comfortably over 40mpg.

Think about it — that is Ford Focus territory on a fully loaded luxury limousine. Perhaps for the first time it is possible to have your cake and eat it?

While you chew on that, there are more predictable elements of the new E-class.

As you would expect, this is a luxurious limousine with a massive list of extras as standard equipment, including dual climate control, leather upholstery, satellite navigation, MP3 attachment for the stereo and automatic headlights and wipers.

Apparently the car will also warn you, if you are driving erratically, to stop and have a coffee, while there is also a parking function to help you reverse into a tight space.

Inside there is plenty of room for five with a large boot at the back of the sculpted body which seems much higher than the front, presumably for aerodynamic reasons.

The driving experience is heightened by the handling which is highly responsive, although the steering borders on the twitchy when the wheel is given anything more than a flick.

The ride is also not as good as I would have hoped, being extremely firm and you certainly feel undualtions and bumps in the road surface, perhaps as a result of the ultra low profile tyres.

Another gripe I had was with the automatic transmission, which features a lever-mounted American-style on the right hand side of the wheel.

I normally drive a Japanese car which has its indicator stalk on the right and on more than one occasion I knocked the car into neutral while overtaking on the motorway, having automatically reached for the right hand stalk. Two knocks and I could have been in reverse which would have been a disaster.

And anyone used to having the wipers on the right would be in the same position. Of course, you would soon get used to it, but I would still prefer a traditional lever between the seats.

Such troubles aside, the E-Class sets a new standard when it comes to performance and economy and is proof positive that you do not need to downsize to enjoy the best of both worlds.

Model: Mercedes-Benz E350 Avantgarde

Performance: 0-62mph in 6.8 seconds; top speed 155mph Economy: 40.9 mpg (combined) CO2 emissions: 181g/km

Price: £34,430

Car supplied by: Inchcape Mercedes, Kidlington. Call 0845 8503965