A new species of eel discovered in an underwater cave is a "living fossil" that has characteristics similar to animals from the Dinosaur Era, biologists reported on Wednesday.

The find which was made in March last year in a 35-metre (113-feet) deep reef cave near the Western Pacific state of Palau has very few of the anatomical characteristics of modern eels.

In contrast this strange eel which has been dubbed the Protoanguilla ("first eel") palau has the same characteristics of ancient eels back when dinosaurs ruled the Earth 200 million years ago.

"The eel looks so bizarre -- large head with relatively short body and various unique, internal characters -- that no ichthyologist, including us, correctly identified it as a member of true eel at first sight," co-author Masaki Miya told Discovery News. Miya is curator of fishes and an adjunct associate professor at Chiba University's Natural History Museum and Institute.

The eel has a disproportionately large head, collar-like openings on the gills, rays on the caudal fin and jawbone tip called premaxilla. Other primitive features include fewer vertebrae; certain fused skull bones and toothed gill rakers.

Miya and his colleague, diver Jiro Sakaue collected eight specimens and carried out DNA tests to assess the fish's place in the genetic history of eels.

The analysis showed that P.palau is in a sister lineage independent of other modern eels. The oldest known eel in the fossil record dates to 100 million years ago but this newly discovered eel could be older than that.

"Those characters assumed to be more primitive than, and equally primitive with, the oldest fossil record actually represent those descended from the Dinosaur Era," Miya said.

So far, the underwater cave in Palau is the only known habitat of this ancient eel but it is possible that it may be found in other remote marine habitats,

Now that the location and the uniqueness of the eel are known, scientists are concerned over what can be done to protect this living fossil.

"Professional as well as amateur divers are always curious about animals and those working for the aquarium trade are notorious for trying to keep every animal in their tanks," Miya said. "We should promote a campaign for preserving animals to the Palau government shortly after the (study's) publication."