Now, just when that confidence looks justified; when the 7-series has established itself as the most successful big BMW ever; when the 5-series has made all of its competitors look a bit old-fashioned and the 1-series has been well-received by the buying public, BMW seem to have had a minor crisis of confidence. The new 3-series is neat, attractive and cohesive but viewed with eyes that have grown accustomed to intriguing, compelling and slightly left-field BMWs, it seems a bit of a cop-out.

Of course the 3-series is BMW's bread-and-butter car (over 3 million have been sold in 30 years) and as such it's been decided that it needs to appeal to a broad customer base. I'm sure it will, but for me it doesn't proffer much real excitement, simply because it seems a bit too familiar - a car glancing in the rear view mirror rather than leading the charge at the head of the wacky 7, 5, 1 and Z4.

Fortunately, underneath the rather conservative skin lies a car chock-full of mechanical and electronic sophistication, blessed with exceptional composure, real agility and a drivetrain that leaves its opposition for dead. The E90, like the four generations of 3-series before it, redefines a class of its own making. After the relative disappointment of the 5-series and Z4, it feels good to say that BMW is back to its best. If you're after a compact sports saloon, the 3-series is the only viable choice.

Perhaps that's no surprise. The E46, even in its last year of production, was arguably still the class leader in terms of dynamic polish, but the gap has been narrowing rapidly in recent years. Spend a little time with the engineers and executives behind the new 3 and you quickly realise that this is a situation that won't be tolerated within BMW. The 3-series, above all others, must be a car that simply annihilates its rivals.

To achieve this, BMW has thrown everything it knows at the new 3. The 330i, the most powerful version at launch (along with four-cylinder 320i and 320d, and six-cylinder 218bhp 325i), features the stunning new magnesium alloy straight-six we sampled last month in the 630i. Extensive use of aluminium in the body structure has pegged the weight of the 330i to 1525kg (just 15kg heavier than its predecessor despite the substantial growth in size, but slightly more than an equivalent Mercedes C-class). The 3-series can be specified with the controversial iDrive control centre and the much-maligned Active Steering - a system that essentially gives a super-quick rack at low speeds and gradually slows steering response with speed.

Other technical highlights include optional adaptive headlights that turn in accordance with the steering wheel (particularly useful when you've got a half-turn of opposite lock dialled in and it's a bit dark, I'm sure), a new lightweight front axle and five-arm rear axle and an incredibly sophisticated DSC stability system. It's capable of 'drying' discs in the rain with imperceptible applications, priming the braking system when it senses you're about to make an emergency stop (when you sharply release the accelerator) and increasing brake assistance as brake temperature rises to mask the effects of fade, as well as introducing a more lenient DTC mode that means you can enjoy a bit more oversteer before it calls a halt to the fun. In conjunction with Active Steering, the DSC brain can even apply corrective lock of up to 5 degrees (which is as much as 60 degrees of input at the steering wheel) should the car start to slide.

Let's get the criticisms out of the way first. Our 330i was fitted with Active Steering and it's still not the miraculous, must-have device that BMW would have you believe. At very low speeds (in town, for example) it can feel a bit jumpy and difficult to modulate, and at high speed there's a curious lack of self-centring and a sticky inertia that you have to overcome to dial in lock. It's better on medium-speed flowing roads that require positive inputs but even then it's not the last word in feedback. Even so, after very little exposure you get used to the system until you very rarely think about it at all.

Okay, now the good stuff. The engine is a peach; silky smooth and working hard low-down only to really come alive as you start to extend it towards the 7000rpm redline. And the noise is fantastic. It's probably notched up a degree or two compared with the E46 when you're enjoying the full rev- range but such is the quality of the note you'll be happy with the intrusion. It's not M3-raspy, but the slightly deeper note is perhaps even more beguiling.

The wonderful engine finds the perfect ally in the much-improved six-speed manual gearbox. It's similar in throw to the last 3-series but there's none of the notchiness that often interrupted progress, just slick, wristy shifts. BMW's manual 'boxes have been getting better and better, but this is the pick of the bunch and the smooth clutch uptake and nicely located pedals make heel-and-toe downshifts a rare treat. Getting into a rhythm in this car is just so easy.

The supple, controlled chassis plays a strong supporting role to the tight drivetrain. An incredibly stiff structure (25 per cent more rigid than the E46) helps, and the damping manages to combine a genuinely supple ride with strong body control. Cornering isn't a roll-free affair but rarely does the 330i lurch or bob uncomfortably from one side to the other through rapid direction changes. It takes its angle, quickly settles and then digs in. Not even the run-flat tyres upset the composure, only making themselves known on badly surfaced braking areas, where the wheels momentarily feel like they're flapping around of their own accord.

The DSC is still a little too keen to intervene on the default mode, and the corrective braking inputs are pretty heavy-handed, but in DTC mode (a quick prod on the DTC button just below the central air vents) things are better. You can edge up to the limits in safety and you quickly learn that the 330i is vice-free and has a steadying degree of understeer should you overstep the mark. Some will find the balance a bit front-led in fact, but with DSC completely disengaged (keep that button depressed for more than three seconds) it's easy to curb the understeer and keep things neutral.

Traction is remarkable, but should you feel inclined the 330i can be made to oversteer pretty much at will and it has a very fluid transition from steady-state understeer to an easily held slide. Even through the tricky, shaded parts of the launch route, the 330i was predictable and I was happy to keep the DSC switched off, safe in the knowledge that I'd have plenty of options should I misjudge a corner.

Inside, the 3-series is very much a shrunken 5-series, which means great quality but a less driver-focussed dash than 3-series owners are used to, and somehow the ambience is less sporty than you'd hope. Combined with the quiet ride and general lack of NVH this might initially make you think that the 3-series has lost its edge, but in fact its ultimate grip and balance are better than ever. A dozen laps of Albacete racetrack (admittedly with the optional 'Sports' suspension: 15mm lower, reprogrammed Active Steering) proved that it's a neat handler when pushed to extremes, but it has an indulgent side that allows long, drawn-out slides if you flick it into corners on a trailing throttle.

As an all-rounder the 330i is pretty tough to fault. It does the smooth, stress-free driving thing admirably but there's a real depth of chassis talent when you want to extend that fabulous engine. It is perhaps a shade too understeery with the standard suspension, and we didn't get a chance to try the Sports option on the road so it's impossible to comment on the sacrifices in ride and general composure that the 15mm lower set-up imposes. Even so it's a rewarding car to drive hard and has a purity of response and driver-dictated balance that none of its rivals possess.

Our advice is to try both Active and conventional steering systems before committing. But don't be fooled by the slightly disappointing styling, because the new 3-series hits its target. And then some.