The submarine was sunk during the First World War when it was rammed by the John Gillman, an armed patrol trawler, after it attacked shipping in the North Sea.
It was also hit by shore batteries and depth charges before finally sinking in 160 feet of water on 13 August 1918.
The German Embassy in London said yesterday that it had not yet been officially informed of the discovery and could not comment. 'We hope this is just reported and left in peace,' a spokeswoman said.
The bodies of at least 20 crewmen are said to be still on board the sunken 257-ton vessel which had attacked the Madame Renee, a steamer, in the North Sea, three days before it was sunk.
A diving team from Whitby - the Dive Action Club, which specialises in searching for wrecks - discovered the submarine a few days ago following a hydrographic survey.
Gerry Fox, who runs his own diving company, said yesterday that the find was very exciting. He added: 'The submarine is in perfect condition and just as she was when she went down. It is unusual for such a wreck not to be damaged or plundered. It is in twice the depth of water of another submarine which was discovered in the same area.'
The diving team, is refusing to identify the precise whereabouts of the U- Boat.
Two years ago, the wreck of another German submarine was plundered by trophy hunters despite an appeal by the German authorities for it to be treated as a war grave.