Mercedes-Benz will begin serial production within three years of a small car powered by a hydrogen fuel cell, the premium brand of DaimlerChrysler said.

"The small-scale series production of the B-Class F-Cell will begin in early 2010," the carmaker said in a statement at the Frankfurt International Motor Show.

"The engine for this innovative vehicle will be a new generation of fuel-cell engine that is much more compact and yet at the same time more powerful and completely practicable for everyday use."

It did not say how much the car will cost or how many it intended to sell.

Fuel cells use the interaction between hydrogen and oxygen to generate electricity that powers the car while emitting only water. They have not yet become commercially viable because of their high cost and limited durability.

The new B-Class car's electric engine will generate top output of 136 horsepower and perform on par with a two-litre petrol engine, the company said. It will consume the equivalent of 2.9 litres of diesel fuel per 100 kilometres driven.- Reuters