On sale next spring with 67bhp on tap, the second-generation common rail unit will produce carbon dioxide emissions of 114g/km - beating the current champion, the 65bhp Renault Clio 1.5dCi, at 115g/km.
However, when the car goes on sale it will have to contend with the Peugeot 206 and Citroen C3 using versions of the same engine - a result of Ford's diesel engine partnership with PSA Peugeot Citroen.
The Peugeot 206 1.4 HDi will go on sale in the UK in December, and although no details are currently available, the emissions for the 70bhp version of the engine are expected to be lower than the 120g/km achieved in the larger 307.
The engine in the new Fiesta records 65.7mpg on the combined cycle and sets new standards for lightweight construction, with wide use of aluminium and plastic parts.
Ford claims that the diesel engine is virtually the same weight as the 1.3-litre petrol engine used in the car, and says it will not have 'nose heavy' handling - a common criticism of small diesel cars.
Although the engine was designed with Euro IV regulations in mind, it will initially only be available as a Euro III compliant unit, meaning that company car drivers will have to wait before losing the 3 per cent BIK tax supplement to be levied on all non-Euro IV compliant diesels from April next year.
- Read full specification details for the new Ford Fiesta in next week's Fleet News