Scientists have discovered a new species of eel living in an underwater cave off the Republic of Palau in the Pacific Ocean and have dubbed it a "living Fossil" as it is similar to the first eels that swam about 200 million years ago.

The bizarre discovery was made last year in a 35-metre-deep fringing-reef cave off they said on Wednesday in the British journal Proceedings of the Royal Society B.

The new genus and species, Protoanguilla palau, has very few of the anatomical characteristics of modern eels, despite 819 species previously being listed and grouped into 19 families, which led scientists to create a new taxonomic family, Protoanguillidae to describe its relationship to other eels.

The name comes from the Greek word "protos," meaning first, and the Latin word for eel, anguilla.

In contrast, scientists say its features resemble those of primitive eels which lived in the early Mesozoic era, back when dinosaurs were beginning their domination of the planet.

The similarities include a disproportionately large head, a short compressed body, collar-like openings on the gills, rays on the caudal fin and a jawbone tip called a premaxilla.

"In some features it is more primitive than recent eels, and in others, even more primitive than the oldest known fossil eels, suggesting that it represents a 'living fossil' without a known fossil record," write the scientists.

The animal used as the basis for the new study was an 18cm-long female which had been collected by one of the researchers during a dive at a 35m-deep cave in the Republic of Palau.

The discovery was made in March last year by a team led by Masaki Miya of the Natural History Museum and Institute in Chiba, Japan, Jiro Sakaue from the Southern Marine Laboratory in Palau and G David Johnson from the Smithsonian Institute in Washington DC.

The team used hand nets and lamps and collected eight specimens, about six to nine centimetres long, and carried out DNA tests to assess the fish's place in the eel genetic history.

The results of the study suggest the Protoanguilla lineage must have more common in the past, because the undersea ridge where its cave home is located is between 60 and 70 million years old.

So far, Protoanguilla palau has only been found in this one location, but it may well have a far wider distribution, according to the study.

The term "living fossil" was coined by Charles Darwin in his book On the Origin of Species and is used to describe species that have survived for millions of years, exploiting niches that are so stable that there is little pressure on them to evolve.