The 306 underwent the only major revamp of its life in May 1997, with the launch of the "Phase 2" version. The basic shape remained the same, but lights, grille and bumpers were redesigned in an effort to bring the styling into line with the new, more rounded, Peugeot family look established with the Peugeot 406. Indicator lamps were now incorporated into the headlamp unit and the new style "block filled" Peugeot lion logo was adopted. The Phase 2 also saw the addition of an estate version.
A new-style typeface for the car's model number was adopted on the tailgate, removing the black plastic backing. There were also some changes to the dashboard layout, including a digital odometer, and trim quality which freshened up the car in the face of increasingly stiff competition from other manufacturers. New engines were also offered, with both 1.8 and 2.0 petrol engines gaining 16-valve cylinder heads together with modest power increases. At this time, the previous trim designations were replaced by L, LX & GLX for the UK market. XS, XSi and GTI-6 models continued as before, but with the Phase 2 headlight, grille, bumper and other cosmetic updates alongside the rest of the range.
Source: Wikipedia (original)