The seven-seat offering would sit between the recently-launched Tiguan and the larger Touareg, according to Autocar magazine.

VW is re-evaluating its SUV range following criticism of the Tiguan by US car dealers that claim the car is too small and expensive for their domestic market.

The new model, which could go on sale as soon as 2011, has been conceived as a rival to Volvo's XC60 and may be built on a modified version of the next-generation Passat.