Skoda's diesel Octavia vRS means you can have your cake and eat it – suitably fast and frugal, says Iain Dooley of the Press Association.

Skoda's second-generation Octavia has been something of a quiet success story. A little bigger and more refined than the first example, it is routinely spoken of in glowing terms in the same breath as more expensive cars from traditional premium manufacturers.

Now the third-generation Octavia is, again, a little bigger and more refined. And, like before, there's also a stealthy-looking vRS version.

With attitudes towards diesel-powered performance cars having changed some time ago, such a formula is no longer a novelty. However, as considerable progress has been made combining horsepower with low emissions and fuel consumption, there's an element of being able to have your cake and eat it with this Octavia vRS.

Consider these facts – combined economy 61.4mpg and a modest C02 rating of 119g/km. This combination alone should be enough to get company car user-choosers jumping up and down at the prospect of getting into an upmarket performance hatchback.

But that's not all, as this frugal and tax-friendly Octavia also has a fun side. How does 184 horsepower, a 0-62mph sprint time of 8.2 seconds and a top speed of 132mph sound?

And remember, we're talking about a diesel Skoda here. The Octavia vRS has always been something that, for most buyers, has existed under the radar but this latest version promises discretion and a decent turn of speed for a fraction of the price of some premium alternatives. For business-users, the Octavia vRS promises a low tax, low outlay ownership proposition.

The Octavia's cabin – be it regular or vRS flavour – does much to rival that of more expensive alternatives. And, being an Octavia, there's enough room to put larger cars to shame. It's the same story in the Octavia's boot. The hatchback format allows easy access, while folding the rear seats transforms the car into a convincing holdall.

If you want the full load-lugger experience go for the Octavia estate which boasts 610 litres of space with the rear seats up and 1,740 litres with them down.

As with the previous model, only more so, are the things that make the Octavia vRS special – sorted handling in the wet or dry, an accomplished ride over the roughest urban roads, diesel refinement and rapid turn of speed. It's these attributes which make the oil-burning Octavia vRS a hidden gem in the performance driving world.

Essentially if you want a discreet, quick, well-equipped family car that won't cost a fortune to run, this is what you should be driving. The same is true if you've got a free rein over the company car scheme. With a benefit-in-kind-friendly C02 rating and compact hatchback levels of economy, what's not to like?

The turbo petrol vRS is a more lively, thanks to its 220 horsepower and a 6.9-second 0-62mph sprint but you do have to work the engine that bit harder to achieve a similar pace to the diesel model. Granted, the Octavia's six-speed manual gearbox is a good one, and there's the option of a slick DSG automatic alternative for both, but there's no denying the torquey diesel's character better suits the Octavia's understated personality.

There's nothing understated about the standard specification with DAB radio, Bluetooth, big alloy wheels, xenon headlights, tyre pressure monitor, sports suspension, sports seats and electronic traction and stability control.

Offering one of the best bang-to-buck ratios in the market, Skoda's Octavia vRS delivers accessible performance for the keen driver while ensuring the value for money theme is ever present in the form of a plush, high-class cabin and a long list of standard kit.