New model would add to the company's growing range of 'four-door coupes'.

A liftback version of the fourth-generation Audi A3 is reportedly under development, with the Ingolstadt brand keen to take sales away from its German rivals.

Sources have told Autocar approval was granted to the A3 liftback project by former CEO Rupert Stadler, who was arrested June this year due to fears he was trying to suppress evidence as German prosecutors work through a criminal investigation into the Dieselgate affair.

If such a model eventuates, it will not only take on the Mercedes-Benz CLA and the upcoming BMW 2 Series Gran Coupe, but would also be a replacement of sorts for the rumoured, but now cancelled, TT Sportback.

Sales of the TT have nose-dived in recent years as buyers have abandoned the sports car segment.

When the liftback debuts, it will be the fourth variant of the next-generation A3 range, following in the footsteps of the five-door hatch, two-door cabriolet, and four-door sedan.

Above: Audi TT Sportback concept.

It's unclear what name the new A3 variant will go under, but it has been suggested it could be branded as the A3 Sportback in order to link it to the A5 Sportback and A7 Sportback models.

The Sportback name is currently used to differentiate the A3 five-door hatch from the three-door model, although next-generation car will not be not offered as a three-door.

Indications are volume-selling versions of the A3 liftback will be powered by turbocharged 1.4-litre petrol and 2.0-litre diesel engines paired with a 48V mild-hybrid system.

A more powerful 2.0-litre petrol engine should power the S3 liftback, while the RS3 version will use the company's 2.5-litre five-cylinder mill to take on the Mercedes-AMG CLA45.

Should all go according to plan, the A3 liftback will go on sale in Europe from 2020.