I had the same problem with my y reg 1.6l petrol focus. It is the vehicle speed sensor located rather obstructively on top of the gearbox. It is a known design fault where the sensor lies it can collect water and dirt and eventually scratches the electromagnet that picks up the spin of the driveshaft The part is relatively cheap and you'll also need to buy the 1 inch retaining pin which holds it in place. I would say this is a capable job for an entusiastic amature diy mechanic. Repairing is quick but fiddly. Firstly you'll need to get the car above you. you can't do this easily from underneath as you won't be able to get any grip on the retaining pin. Firstly locate the sensor (about 2 inhes long - black with a little arm on the right side connected to a wire) and unplug the wire, next get a good strong pair of mole grips on the retaining pin and pull horizontally, don't wiggle it the last thing you want to do is snap the pin.the little metal arm on the pin may fall off but this is superfulous. when the 1 inch pin is removed (give your arms a rest) then slowly and carfully jiggle the sensor out of the housing (pull it straight up otherwise you could snap it) inspect the faulty sensor for any metal flecks or wearing that could lead to debris still being in the housing (nothing you can do about that except get it drained and inspected at a garage) if all is ok get your new sensor (don't touch the part that goes in the housing) and put a little waterproof grease on the two o-rings half way up and slot it into position. it may seem to sit a little higher than the previuos but this isn't always the case. next line up your retaining pin so it passes through the plastic arm of the sensor and into the hole the previous pin was in. push it straight in as far as your finger will let it then get a flat piece of wood and lightly tap it home with a hammer (LIGHTLY!!!!!!) connect the wire again and voi' la you are done. That will sort the speedo dropping out hopefully but as for the low revs/cutting out mine still has that problem if slightly alieviated by this repair. If you get this sorted please shout me back as i'm desperate to sort this out. Also whats your fuel consumption like?
Tom Perry - king of Fords, March 2011
