We have synthesized a new form of vanadium dioxide using the hydrothermal reaction of vanadium pentoxide and lithium hydroxide in the presence of an organic templating cation. The hydrated lithium vanadium oxide formed has the simplest layered structure of any vanadium oxide, containing only VO5 square pyramids whose apices alternate up and down in the layer. The lithium may be removed by electrochemical delithiation. This new compound reversibly reacts with lithium and therefore may be used as the cathode in lithium batteries.