I don't know much about what goes on in the 8's engine, however this is basically what happened and what stage am at now. . . .
My engine management light came on and the car struggled for power, then the very same evening it went off and drove like normal.
The next morning the light was on again and I attempted to drive it to see if the problem persisted, again struggled for power and it cut out about 30 mph. The following day the car wouldn't start, however fuel and gasses were flowing through the exhaust system.
My mechanic came and plugged it into his car engine system and the fault read "random misfire". I got it to his garage and he can't seem to spot an issue but has had some advice from somebody else saying it needs a new engine and I have been quoted £2500 fitted for a new engine. . . . .

Advice on what to do next would be great! The car has done 77k mileage and was fully serviced last year. It is a 55 model 1.3L version.

 

Can you describe what was all entailed in last years "full service"?

 

Fully serviced? Mind to tell us what has been changed/replaced?

Random misfire? You mean the code is P0301?

It sounds like coils and/or plugs give out, because if your engine blew it will be very obvious you would notice it.

 

Fully serviced? Mind to tell us what has been changed/replaced?

Random misfire? You mean the code is P0301?

It sounds like coils and/or plugs give out, because if your engine blew it will be very obvious you would notice it.

 

I got brand new spark plugs installed and he changed all oil and that, It was back in last July

 

Stop ... don't do another thing until you get a compression test.
Report back with the numbers

 

Ok I will make sure thats been done, whats the next step if the compression is fine/fails?

 

If the compression is ok then it's time to look into other things\do some proper maintenance.
If the compression isn't ok.. it's new engine time, with all of the above still applying.

 

could be as simple as coils

 

Exactly what I was thinking as well ...
I just didn't want the poor guy to go and spend a bunch of cash on something that may not be necessary

Compression test is the cheapest thing to do at this point.

If it passes then buy a HEI Ignition Tester to test coils
http://www.ebay.ca/sch/i.html?_nkw=H....c0.m270.l1313

edit ---
There is a tonne of other stuff the OP could do as well
Clean ESS
Clean Maf
Inspect Air Filter
Check Plugs (again) -- You can tell a lot from a plug for example if a coil is bad the plug will be fouled.
Check Plug wires

Oh and lets see ... how about reporting what the CEL was? There's an idea. Random misfire but I want to see the code/codes. And I don't blame the OP for this most people don't know that they should force the Mechanic to report all codes stored in the ECU.