Although the Mk IV version of the Golf didn't do the GTI brand a great deal of credit, it's fair to say that Volkswagen haven't repeated their error with the Mk V. Gone are the prospects of GTIs with less power than some humble shopping hatches. Charged with nursing the equity of the GTI badge back to rude health, Volkswagen's Golf GTI 2.0T-FSI has proved to be a storming success.

In MK IV guise, the car that was once the standard bearer for the hot hatch generation had become overpriced, overweight and overlooked. Yes, the 1.8T versions did offer a bit of fun behind the wheel but most customers couldn't stretch to that sort of money when identically powered Skodas and SEATs were available for far less. The GTI badge was in danger of becoming a busted flush.

The Mk V Golf has changed all that. The sole powerplant on offer is no asthmatic wheezer. The engine powering the GTI is a turbocharged version of VW's 2.0-litre FSI petrol engine, fettled to produce a hefty 200PS - around 198bhp in old money. Drive is directed to the front wheels in classic GTI style, and there's a six-speed manual as standard or the excellent DSG twin-clutch transmission available as an option.

Owners can expect to accomplish the sprint to 60mph in around 6.5 seconds in a DSG-equipped car and look forward to a top speed that knocks on the door of 150mph. A combined fuel economy figure of around 36mpg means that the Golf won't cost a fortune to run either. It's not noticeably cheap to buy, however, although Volkswagen trust that a healthy demand will plump up residual values, thus keeping that crucial 'pence per mile' figure over a typical three-year ownership period manageable.

The base price for the three-door variant starts at £20,815, with the five-door tacking another £500 on top of that. Volkswagen created a rather tantalising website that shows what colours and options you can choose for your GTI and when I'd finished specifying my rather natty example, the bill at the end came to over £25,000. That's some serious money but at least the GTI can now back that up with a class-leading chassis and an engine that really delivers the performance goods. A full-length honeycomb grille, 17-inch alloy wheels, a roof spoiler and GTI badging differentiate this car from its humbler brethren. The black grille surround also looks less like an oversized Honda badge than the metallic finishes worn by other Golfs.

"Once more, Wolfsburg makes the definitive GTI.."

On the example I specified on Volkswagen's website, though I'd probably go back and reconsider the pearlescent paint and leather seats, I'd have to keep the DSG gearbox. The revolutionary Dynamic Shift Gearbox was first seen in the Audi TT 3.2 V6 coupe and is based around a sequential manual transmission but utilises an ingenious twin clutch system to ensure creamy smoothness. Engage first gear and the gearbox will pre-engage second gear in advance, the second clutch engaging as soon as you flick up to slot instantly into second gear. This means a seamless flow of power. The electronics predict what gear you're about to engage, depending on whether you're accelerating or braking and the result is astonishing, making every other gearbox look distinctly clunky. The other option is to slip it into 'D' and drive it like a normal automatic. Even in this mode it's butter smooth and makes other attempts at sequential manual systems such as Ferrari's F1 and BMW's SMG appear distinctly clunky and yester-tech.

The GTI's engine is a real work of art too. Fuel Stratified Injection is a system that promises the twin benefits of more power and better economy. A high-pressure fuel line mounted on the side of the cylinder head, often dubbed 'common rail', injects fuel straight into the combustion chamber. The shape of the pistons and the clever working of a set of valves make the air 'tumble', thus creating more efficient combustion. So far so good, but don't a number of other manufacturers have the same set up? No.

Where FSI engines really impress is their behaviour under part throttle loads. Whereas before, part throttle meant just that, partially strangulating the output by closing a butterfly valve, the FSI system can be run with the throttles in a more efficient open position. How? In effect by creating a rich fuel mix directly next to the spark plug and a leaner mix in other parts of the combustion chamber. This is not only more efficient in terms of how much fuel enters the chamber in the first place but it also means that less energy is wasted as heat to the cylinder block. In effect, a blanket of air shields the ignited fuel from the walls of the cylinder.

When the throttle is pressed wide open, the engine reverts top a more conventional 'homogenous' method of filling the combustion chamber with fuel and air. The 'tumble' effect and the synchronisation of air and fuel along with the careful metering of the high-pressure injection system all combine to offer more power and a cleaner engine. When you're dawdling, you get great economy and when you want to drop the hammer you've got more power. Whereas many 'direct injection' engines have been noticeably noisier than conventional petrol powerplants, the FSI unit offers both a pleasantly refined hum and instantaneous throttle responses.

One criticism levelled at the two previous generation Golfs was that although the cars offered a ride and refinement package that was hard to beat, they never really offered the sort of infectious handling that many rivals could boast. The fifth generation car adopts a pragmatic tactic in 'benchmarking' the suspension of the Ford Focus - and it works a treat. The body is eighty per cent stiffer than its predecessor and the electro-mechanical steering feel and composed body control are leagues ahead. As a result, Volkswagen have been able to build a hot hatch version that enthusiasts will again want to drive. Once more, Wolfsburg makes the definitive GTI.