I've had this happen twice now: I got my gen3 in October 09' and lately the car has said the key wasn't present though it was sitting on the passenger seat. I had to put the fob up to the start button just to get my car started. The fob battery seems fine and I don't really think it'd be time to change them yet...or is it?
How about it letting you in the door? Does the red LED on the keyfob flash at about 3 feet from the door of the locked car? If it's reliable letting you in the door and the keyfob LED flashes, then I'd say that the keyfob is OK. Does the problem occur at a consistent location? Like the parking lot where you work, but not at home? There are areas where the radio interference is so bad that the keyfob communications can be drowned out. I've occasionally had problems with the door, but never with the Power button.
RobH has some excellent points in his post. I usually get that message if you don't get your rear hatch or a door closed all the way. Usually, it's the rear hatch. I've never had the starting issue with the power button though when this happens.
I've had this happen a couple times in my 2010 while the key was sitting in the center console under the bridge. I moved it a few inches and it was OK. It seems there is a dead spot.
This happened to me twice and my 2010 Prius is just one year old...probably happened about 4 and 6 months ago. No matter what I did the car kept saying to hold the key next to the power button. Both times I had just gotten into the car with the key in my pocket and the door unlocked and opened normally. Each time it was in a different place. 3PriusMike
Where was your cellphone? You do know they are on even when they are not connected (call not in progress) right?
it's very odd, since yeah my fob still has excellent range to unlock and lock my doors,it happens just once and a while inside the car (keys arent always in the same place) Yes I do know cell phones are on even when I'm not on a call.
FWIW, I had this happen once, and it was the rear hatch not being fully closed. (Kind of strange they don't have a light on the dash to tell you that...). Good luck ~T
When I had my rear hatch door not fully closed, I had the "Key Detected in Vehicle" alarm message. Not the Key Not Detected that the OP describes.