Based on the first-principle density functional calculations we predict that Li-doped graphane (prehydrogenated graphene) can be a potential candidate for hydrogen storage. The calculated Li-binding energy on graphane is significantly higher than the Li bulk's cohesive energy ruling out any possibility of cluster formations in the Li-doped graphane. Our study shows that even with very low concentration (5.56%) of Li doping, the Li-graphane sheet can achieve a reasonable hydrogen storage capacity of 3.23 wt.%. The van der Waals corrected H2 binding energies fall within the range of 0.12-0.29 eV, suitable for practical H2 storage applications. © Europhysics Letters Association 2011.