While some leading car makers have pulled out of the sport due to the economic downturn, Mercedes said it was looking to enhance its brand name by racing as the Mercedes Grand Prix and the famed Silver Arrow cars.

''Mercedes-Benz is the most valued and best-known premium automotive brand in the world,'' the chief executive of Daimler AG, Mercedes-Benz's parent company, Dieter Zetsche, said.

''This brand looks for competition of the utmost quality in all relevant fields in order to continually improve its performance in the face of such new challenges.''

Mercedes last raced under its own name in 1955, with drivers such as Juan Manuel Fangio until pulling out of the sport when one of its cars plunged into the crowd at Le Mans and killed more than 80 people in 1955.

It returned in the early 1990s when forming its partnership with McLaren in 1995, becoming the second most successful Formula One team after Ferrari.

''We look back on 15 successful years of great collaboration with McLaren. In that time, we won four world championship titles and finished 10 times as runner-up in the drivers' and constructors' rankings,'' vice-president of Mercedes Benz motor sport Norbert Haug said.

''Since the first victory in the 1997 Australian Grand Prix, the modern Silver Arrows have achieved a total of 60 victories in 223 races to ensure that our brand symbol, the star, stands for the greatest successes in F1.''

Brawn GP, which took over from Honda when it pulled out from the sport in March, had a spectacular first season with Jenson Button winning the 2009 drivers' title and the team taking the constructors' championship.

Team chief Ross Brawn had only spent one full season with Honda, in charge of the team's 2008 campaign after 10 years with Ferrari. He will remain at Mercedes Grand Prix, although Haug is expected to be the team's coordinator with Mercedes.

Button was partnered this year by Rubens Barrichello, who is moving to Williams next season.

McLaren's drivers were 2008 world champion Lewis Hamilton and Heikki Kovalainen.

The decision on who the two drivers for the new Mercedes GP team would be ''will still take come time'', Haug said. ''We have to consider this carefully.''

German media reports say Nico Rosberg, formerly with Williams, is virtually certain to get one of the two seats. AP