IN THIS FEATURE Just a prototype - for now

This hot Panda is likely to gain the Abarth name judging by the version revealed at Bologna in its rally-car colour scheme, although that could end up being reserved for a hotter three-door version in the future. If that happens, the sporting Panda will be called, simply, Sporting in line with warmed-over Puntos and Seicentos. It uses the 1.4-litre, 16-valve, 95bhp engine and six-speed gearbox from the Punto Sporting to create a rorty, peppy little device, its eager pace complemented by the bigger brakes from that quickish Punto and some lower-riding, stiffer springs and dampers. Fatter tyres on five-spoke alloy wheels add the grip that would be lacking if the Sporting retained the standard 165-section tyres.

Inside, the ambience is, well, sportier with a dark facia, colourful seats and a leather-rimmed steering wheel, and deeper bumper valances, sill extensions, wheel-arch trims and a tail spoiler complete the makeover. I had driven an earlier prototype at Fiat's Balocco test track a few months beforehand, and hoped then that the 'bwarp-bwarp' exhaust note wouldn't be toned down too much for production. 'We'll have to make it a little quieter,' the Panda's dynamics manager had said, 'but I hope we'll keep the character.' Now, trying the near-production version at Balocco again, it seems that hope is fulfilled. The exhaust and intake sounds are indeed quieter, but there's still a healthy rasp redolent of past fast four-cylinder Fiats; a good time is the obvious intent.

The Panda, even in non-sporty form, is already a surprisingly entertaining drive. The suspension is soft but its steering and handling have an easy, progressive feel that makes it great fun to drive hard. In this it's very similar to past small Fiats, eager and interactive without being fast. So the Abarth - we'll call it that for now - stands every chance of being a driver-pleaser.

Straight away, you can feel that the Abarth keeps the good parts and adds a few more of its own. The engine feels crisp and keen to the accelerator, and revs with spirit where the standard car's 1.2-litre unit starts to fade. Fiat isn't quoting performance figures yet, but a sub-10-second 0-60mph must surely be likely.

The course at Balocco begins with an engine-revving straight, followed by a fast kink and some big bends. Already the steering felt positive and quick to react, the springiness around the straight-ahead found in the standard car (it takes up the roll angles before moving on to a direction change) absent because the suspension is so much tauter. Into the kink and the Panda latches hard on to its line with minimal understeer, eager to let you play with that line on the accelerator. This is how a sparky, sporty hatchback should be.

The brakes feel firm, the steering keeps its keenness, the engine has enough torque to fire the Panda out of the corner without leaving you craving more. It's not ultimately that fast, but it will give you a great time. Yet it rides acceptably smoothly, too, despite the firmed-up suspension - at least as far as I could tell on the test track.

Slightly awkwardly for Fiat, this Panda upstages the Punto Sporting on three counts. It's likely to be quicker, because it matches the same powertrain to a lighter body. It handles with more feel, flair and fluidity, just as a standard Panda does relative to a regular Punto. And it's likely to be a bargain if our price-guess of under £8000 proves accurate. Nothing else will feel so good for so little outlay, and compared with the half-hearted Seicento Sporting it's a revelation. Hail the new fun-per-£ champion.