Land Rover will introduce a two-wheel drive version of its new compact Range Rover LRX which will emit less than 130g/km of carbon dioxide when it goes on sale in 2011.
The new LRX will also be available in four-wheel drive, but the two-wheel drive option will make it the lightest and most fuel efficient model Range Rover has ever produced.
JaguarLandRover is investing £800 million to develop environmental focused technologies.
Phil Popham, Land Rover managing director, said: "A 2WD option is just one way in which we are developing our vehicles’ efficiency while adding to the Land Rover range and expanding our customer base.
“We will continue to make the 'world's finest all-terrain vehicles' for those customers who require 4WD but will also now offer an alternative to those that don't."
The use of hybrid technology is also part of the research developments for the larger vehicles in the Land Rover range. The first diesel hybrid will be available in 2012 and on the road in 2013.
By the end of 2010 Land Rover will be testing the first diesel hybrid prototype called the 'range_e' which is being developed using a Range Rover Sport platform.
Tests of this vehicle will use the existing 3.0 litre TDV6 diesel engine featuring a ZF eight-speed automatic transmission. The goal is to achieve a range of 20 miles using electric power only emitting less than 100 g/km of CO2 emissions and to achieve a top speed of around 120mph.