Among low luminosity galactic X-ray sources, AM Herculis-type binaries form a distinct class. The main characteristics of this group of binaries are: orbital periods of the order of a few hours, the presence of emission lines of H I, He I, He II, C III and N III, variable linear and circular polarization of the optical radiation, and emission of a strong and variable soft X-ray flux. To date six such binaries have been detected. Four of these- AM Her1,2, AN Ursae Majoris3,4, 2A0311-2275,6 and VV Puppis7,8-have been known for some time, while E1405-4519 and a new serendipitous source near NGC360710 were detected only recently from the Einstein satellite observations. It is generally believed that these binaries consist of a magnetic white dwarf primary star and a red dwarf companion star11. The X-ray emission then arises due to accretion of matter from the red dwarf secondary onto the poles of the magnetic white dwarf12. We now report the discovery of a new X-ray source and its optical identification with a binary which has the necessary X-ray and optical characteristics to qualify it as a new member of the AM Her class of objects.