BMW has revealed an all-new 1.5-litre, three-cylinder turbocharged engine. It will find its way under the bonnet of next year’s new Mini, the new front-drive BMW family and, it’s rumoured, the current rear-drive 1-series and 3-series models.

Codenamed B38 (petrol) and B37 (diesel), it will come in petrol and diesel forms and is expected to be between five and 15 percent more economical than BMW’s current N20 four-cylinder engines.

Built on an alloy block, the engine gets Valvetronic variable valve timing, a single turbo, 11.0:1 compression ratio and a longer stroke than the N20. It has been engineered as part of BMW future modular engine strategy, which sees all engines based on the same individual 500cc cylinder.

BMW says the petrol engine will develop between 40bhp and 66bhp per cylinder, giving the various versions power outputs of between 120bhp and 200bhp.

The B37 diesel engine shares up to 60 percent of its architecture with the petrol engine and can be made on the same production line. The diesel engine output will range between 100bhp and 181bhp.

This engine is likely to first appear in the rear of the BMW i8 hybrid supercar, where it will be equipped with a generator to help recharge the battery pack. BMW's Hams Hall plant is expected to produce the new engine.

BMW is also preparing the B48, its four-cylinder sister engine of the B38. It is expected to power models including the next-generation Mini Cooper S, to be shown in late 2013. The engine is expected to produce in excess of 220bhp.