TECHNOLOGY FOCUS - INORGANIC CHEMISTRY - Preferred Arrangement: The reaction chamber comprises a perforated distributor plate (22) forming a floor of chamber. The oxygen inlet (sparging tube) is provided above the distributor plate. The heater is controlled in response to autothermic or absence of autothermic conditions within reaction chamber. The tubular membrane for separation of hydrogen, has a bore in fluid communication with an outlet outside the reaction chamber. The tubular membrane is U-shaped and is internally reinforced to resist external crushing forces. Preferred Composition: The tubular membrane is metallic and comprises palladium, niobium, tantalum or their alloys, preferably the membrane comprises niobium and/or tantalum having palladium coating on both internal and external surfaces of membrane. EXAMPLE - The hydrogen was formed under autothermal conditions, depending on the oxygen flow rate. The reaction was carried out by varying the oxygen flowrate from 14.7-21 mol/h at a pressure of 0.68 MPa, temperature of 923 K, methane flowrate of 33.74 mol/h, steam flowrate of 138 mol/h, sweep gas pressure of 0.14 MPa and sweep gas flowrate of 45 mol/h. The oxygen to methane ratio was varied from 0.44-0.62, when the steam to methane ratio was kept constant at 4. For e.g. when the oxygen flow rate was 14.7 mol/h the hydrogen yield was 1.95, and when the oxygen flow rate was 21 mol/h the hydrogen yield was 1.88. The autothermal conditions were reached under experimental conditions in the pilot plant with an oxygen to methane ratio of 0.45 or more. Theoretically, based on respective thermodynamic heats of reaction for steam reformation and methane oxidation, 20% of methane was oxidized to produce enough heat to drive the steam reformation reaction. When the steam-methane ratio was higher, the methane conversion ratio and hydrogen yield were increased but hydrogen permeation rate decreased. Therefore, the steam to methane ratio was maintained at 2.4:1 or less to maximize hydrogen permeation through membrane. The formation of coke in the fluidized bed reactor was reduced because of constant movement of catalyst particles within fluidized bed. Carbon-fouled particles are recirculated to oxygen-rich zones of the bed, where the coke was combusted. It was found that both membrane conversion and hydrogen yield increased with increasing temperature. The hydrogen yield was increased to 33%, when the reacted temperature was increased from 850-950 K.