The correct option is C Interstitial cells
Interstitial stem cells in Hydra constitute a population of multipotent cells, which continuously give rise to differentiated products during the growth and budding of Hydra polyps. They also give rise to germ cells in animals undergoing sexual differentiation. Cloning experiments have shown that interstitial stem cells are multipotent. In vivo tracing of stem cell lineages has revealed that stem cells divide symmetrically to yield two stem cells or asymmetrically to yield one stem cell daughter and one daughter cell which initiates nerve or nematocysts differentiation.