"The stored kinetic energy can be applied by the driver on demand whenever required... to boost performance for rapid acceleration. The device is particularly beneficial when exiting corners or for tricky overtaking manoeuvres," Torotrak said.

Formula One is introducing new rules in 2009 aimed at reducing the environmental impact of the sport, including the use of kinetic energy recovery systems (KERS) which help store energy that would otherwise be wasted during deceleration.

Formula One has been trying to shake off its gas-guzzling image and in November the International Automobile Federation (FIA) said the sport had to address 21st century environmental concerns or risk joining the dinosaurs in extinction.

Saving money, energy and resources and reducing waste is now top of the agenda for a sport famed in the past for profligate spending and conspicuous consumption.

While the initial focus of the technology will be on racing cars, Torotrak Chief Executive Dick Elsy said that KERS could eventually be applied to mainstream cars "to provide performance, economy and greenhouse emission benefits."

At 0830 GMT, Torotrak shares were up 8.4 percent at 45 pence, valuing the firm at about 54 million pounds (US$107 million).

Arbuthnot analyst Xavier Gunner welcomed the deal, saying it gave "another sign of confidence in the new management and that they are delivering the right strategy.