In Two Stroke Spark Ignition engines the thermal efficiency increases with increase in compression ratio. Also, with higher compression ratios the Ican burning limit increases because of the reduction in initial combustion period. Under part throttle conditions the fuel economy can be improved with higher compression ratios. However, this is often associated with problems of knocking and roughness. The paper describes a new type of cylinder head design which allows operating at high compression ratios under part load conditions and at lower compression ratios under full throttle condition. This paper begins by discussing the necessity for developing an automatic variable compression ratio engine (AVCR engine) and continues with the explanation of working of an experimental engine developed by TVS Suzuki Ltd. The mathematical model for theoretical prediction of the pressure crank angle diagram is then explained. The paper concludes with the results of tests conducted on AVCR engine on engine dynamometer and further work planned to be done.