In this work, we developed a new preparation technique for palladium composite membranes which results in an ultra-thin and defect-free selective layer with outstanding performance properties and long life. In the method, a palladium precursor and a reducing agent on opposite sides of a substrate of porous alumina hollow fibers were placed and used an electric field to cause migration of metal ions to the outer surface where they are reduced to form seeds at high concentration in a narrow spatial region. The ethanol steam reforming was conducted in a membrane reactor with the Pd membrane and the performance of this reactor was compared with results from a packed bed reactor under identical conditions. For all conditions studied, enhancement of ethanol conversion and hydrogen yield were observed in the membrane reactor compared to the packed bed reactor.