The gas sensitivity exhibited by nanoparticles of 1 wt% Pd catalysed antimony doped tin dioxide(ATO) prepared by a citrate–nitrate process is reported here. The reduction of particle size to < 3 nm, a dimension smaller than double the thickness of the charge depletion layer,has resulted in an exceptionally high butane sensitivity and selectivity. Thesensitivity and selectivity of ATO particles of different sizes unequivocally provedthat reducing the size of particles to below twice the Debye length dimensionproduces materials with exceptionally high sensitivity and selectivity for sensorapplications. The sensitivity of the samples towards 1000 ppm butane varied in the order98% > 55% > 47%, forCNP > SP > CP samples having crystallite sizes of the order of 2.4 nm to 18 nm to 25 nm,respectively. The ATO nanoparticles exhibited not only a remarkableincrease in gas sensitivity of around 98% towards 1000 ppm butane at350 °C, but also a preferential selectivity to butane compared to other gases such as CO,CO2,SO2,CH4 andH2. In addition to the exceptionally high sensitivity and selectivity, the developed sensors alsoexhibited an improved response time and long term stability, which are of paramountimportance for practical device development.