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Scientists found the new species, which on average is just 7.7 millimeters long, in the southwestern Pacific island nation of Papua New Guinea.
The frog, scientifically named Paedophryne amauensis, spends its life in moist leaf litter on the floors of tropical wet-forests, and calls out with a continuous series of high-pitched notes at dawn and dusk.
Experts are baffled by the find as it was previously thought extreme body size in vertebrates, whether large or small, was associated with living in water.
Professor Chris Austin, of Louisiana State University, who discovered the frog on a three-month field trip to the Pacific island, said by contrast these creatures make their habitats on fallen leaves on the floor of tropical rainforests.
His discovery of the creatures, named Paedophryne amanuensis after a village called Amau near where they were found, will help scientists understand more about extreme body size, he wrote in the journal PLoS One.
The discovery reveals that tiny frogs "are not merely curiosities, but represent a previously unrecognized ecological guild. Such discoveries are increasingly critical in this time of global amphibian declines and extinctions," the report says.