Diesel continues to ingrain itself in the motorist psyche; its appeal has stretched far beyond mini-cabbers and farmers and has now reached the opposite end of the motoring spectrum: the enthusiast. Most manufacturers now have a diesel offering aimed at the keen driver and the diesel warm hatch is becoming an increasingly popular choice as people choose them not just for economic reasons, but also, thanks to modern diesel technology, because they are becoming more usable and driveable than their petrol stable mates.

MG's offering in the sector is the ZR TD. We spent a week with the higher rated 113PS (about 111bhp) version that costs £13,845 in three-door form (a 101PS model is also available at £500 less). Based on the venerable L-series 8-valve 2-litre unit, this unit delivers decent performance, much akin to the 1.8-litre 120PS petrol model, with torque being the key - a peak of 192lb.ft gives good in-gear urge. Unlike many diesels this L-series is also quite keen to rev out to its red line, meaning the driver gets a usable power band of 2500rpm or so. It does become vocal when really worked but the NVH is reasonably well suppressed and vibration through the controls is minimal. In reality, riding the wave of torque is equally effective as making the engine graft.

The real benefit of this engine manifests itself at the fuel pumps; or rather it doesn't because you don't spend much time there. MG claims an extra urban figure of 67.3mpg, which is impressive to say the least. As per usual we never got anywhere near the claimed figures, but an average in the mid 40s (mpg) is no mean feat for a car in our hands; particularly a warm hatch, and especially one that serves up the driver enjoyment that the ZR does.

My most recent MG encounter, the ZR Express van, left me literally shaken and stirred whilst largely under whelmed by its real world ability. It was scintillating on the right road, but the journey to that road would be a filling-loosening cringe-fest. Anticipation was not a key word when I got behind the wheel of the diesel ZR. However, it only took a couple of hundred yards and a roundabout to reveal something very different in this new ZR chassis: compliance and subtlety. The chassis springing and damping is a world apart from the ZR Express. We're not sure how much the higher profile tyres and heavier engine contribute to this newfound ability; whatever, the result is very pleasing. Whereas the old ZR bobbed, weaved, bounced and tramlined under almost all conditions other than racetrack bitumen, the new one flows.

Your average UK B-road becomes the playground it should be as the revelatory compliance keeps the ZR planted to the line you chose with the excellently weighted and direct steering backing you up. I actually think that most modestly talented drivers could guide the ZR diesel down any given stretch of road as quick as they would the previous generation ZR Express (that car is lighter and significantly more powerful) and you would be a lot less rattled and drained at the end of it. The diesel's torquey nature complements the chassis well pulling the nose out of the bends with the kind of poke normally associated with a significantly bigger petrol engine. The brakes are also full of feel as well as plenty powerful and fade free. The ABS works well allowing you to modulate things right upto the limit, only really being required in an emergency.

So, the latest ZR delivers all that the blurb suggests in terms of driver pleasure and I can honestly say that I'm surprised and pleased by this in equally generous amounts. Unfortunately the good news finished there as the MG's perpetual weaknesses remain. The interior is still lagging badly behind the rest of the class, in spite of all the efforts of the team at MG to improve things. Better, yes. World class? No. The theme continues on the exterior where its age is evident again, despite a neat facelift. Peter Stevens and his designers keep working marvels in terms of disguising the ZR's age where they can, but the profile remains the same as it has for a decade now. It's a shame, but a reflection of how much MG Rover needs an injection of cash.

You have to feel sorry for the engineers at MG. They repeatedly prove themselves to be capable of putting chassis from seemingly humble origins into cars that are genuinely entertaining and engaging to drive, but the overall package is a let down. Hopefully this talented group will one day get the budget they deserve to dish up something to put MG and Rover back on the map and give the small hatch market something to chew on. In the meantime they have to be content with the fact that the latest ZR is a cracking chassis marred by the styling and interior. It's a case of nice legs, shame about the face.

The press information lists the MG ZR's rivals as the Clio, Polo, 206 and Corsa and from a driving point of view it is sitting pretty. The interior quality and looks may redress the balance, depending on your priorities as far as this bunch of rivals is concerned. However, if you add to this list the Skoda Fabia and Seat Ibiza then things look a little shakier. These Polo derivatives offer more performance and superior interior quality for less money. The Fabia vRS in particular makes itself a compelling argument, and unfortunately the ZR's weaknesses are probably too great a deficit to make up. We've not driven the Fabia vRS yet, but it will be interesting to see whether the MG's driver appeal is enough to paper over the cracks.