CarAdvice’s spy photographers have captured an Audi S1 prototype undergoing testing on public roads in Europe.

The images give us our strongest indication yet that Audi is preparing a hot-hatch version of its city car to sit at the top of the A1 line-up.

Late last year, Audi teased us with the ballistic, rally-themed A1 quattro. The all-wheel-drive rocket packed a 188kW/350Nm 2.0-litre turbocharged engine, but was capped to an exclusive production run of 333 units – all of them in left-hand-drive.

The S1, however, should be much more accessible, with Audi certain to produce it without volume restrictions and in right-hand-drive, making it a good chance for the Australian market.

Although this prototype wears the body panels of the entry-level A1 three-door, the quad exhaust pipes at the rear are a tell-tale sign of it enhanced performance.

Our spy photographers believe the Audi S1 will be powered by a slightly detuned version of the A1 quattro’s 2.0-litre turbo, potentially producing between 164-186kW, with drive distributed to all four wheels.

The powertrain upgrades will be joined by a revised suspension set-up to create a sportier ride and improved handling characteristics.

The S1 will get a less extreme body kit than the A1 quattro, likely featuring signature Audi S line enhancements such as brushed aluminium grille slats and mirror housings, more aggressive front and rear bumpers and larger alloy wheels, along with some subtle sporting tweaks in the cabin.

Audi is yet to confirm production of the S1 at the stage, although it is believed the pocket rocket from Ingolstadt could hit the market as early as 2013.

The most powerful model in Audi Australia’s current A1 line-up is the Audi A1 Sport, which produces 136kW/250Nm from its 1.4-litre turbocharged engine.