Over the past couple of years we’ve been reporting about a new engine concept where a small amount of ethanol is injected directly into a cylinder chamber before combustion along with a blast of gasoline. The burning of ethanol has the positive side effect of cooling the combustion chamber, and when combined with the fuel’s higher octane rating, much higher compression ratios can be run, the end result being diesel-like economy from a gasoline engine.

Now Chrysler, along with the U.S. Department of Energy (DOE), is investigating a similar concept but where diesel fuel is injected instead of ethanol.

Chrysler has revealed during the DOE’s 2011 Merit Review in Washington D.C. plans for a prototype four-cylinder engine displacing 2.4-liters and featuring a turbocharging system. The automaker claims that when fitted to one of its minivan models, combined cycle fuel economy can be improved by as much as 25 percent when compared with a conventional 4.0-liter V-6 gasoline engine. This translates roughly to a highway fuel economy for a vehicle like the Town & Country of up to 31 mpg.

The key to success will be injecting the diesel fuel at the right point of the combustion cycle. This will allow the engine to run at a higher compression ratio, improving efficiency especially during partial loads, where engines spend most of their time.

Given the fact that gasoline engines work using the Otto cycle, while diesels rely on a combustion cycle of their own, simply getting the thing to work requires a ton of technology including two turbochargers, a high-pressure and low-pressure unit, special exhaust cooling systems, as well as separate fuel tanks for the dual fuels.

Despite the complexity, Chrysler isn’t alone in this initiative. In addition to a $14.5 million funding bill from the DOE, other groups including Delphi, FEV, Argonne National Laboratory and Ohio State University, have provided $15.5 million.

Follow the jump below to view Chrysler’s complete Merit Review presentation.

[Chrysler via Kicking Tires]