The performance of the present-day Zircaloy-UO2 fuel design for water-cooled reactors has for several years been intensively examined and modeled. The established know-how is used as a background for the suggestion of a new design, named LOWI (LOW-Interaction), which, by merely introducing a small change in the arrangement of the fuel material, should lead to an improved performance with respect to mechanical interaction and, at the same time, should reduce the fuel center temperature and therefore consequently reduce the stored energy. Considerations that form the basis for the LOWI design are supported by the calculational results of some of the more important aspects. The design has been initially evaluated in an irradiation experiment, and the test results have generally supported the objectives of the design change.