Microsoft will begin selling in April an upgraded version of its Xbox 360 console that packs a higher capacity disk drive and high-definition video interface not present on current models and is still cheaper than the rival PlayStation 3.

The Xbox 360 Elite will cost about $480 (£245) in the US, compared to the $499 price tag of the low-end PlayStation 3 console. The hard-disk drive in the new version can accommodate up to 120G bytes of data, which is six times that of the drive on current models. The HDMI (high-definition multimedia interface) interface will also make hooking up the console to a modern flat-panel TV easier.

The console will be the third in the Xbox 360 family after the $399 standard version and $299 "core system" and its launch will raise stands to make the competitive games console market even more so.

The Xbox 360 has been on sale for more than a year. When it hit stores in November 2005 it was the first console to offer high-definition gaming although it's now sharing that distinction with Sony Computer Entertainment Inc.'s PlayStation 3, which launched in November 2006. Both consoles are also battling with Nintendo Co. Ltd.'s Wii, which has proved surprisingly popular among consumers thanks to its innovative movement-sensitive controller. The Wii doesn't offer high-definition.

The Xbox 360 Elite is due to hit stores in the US on April 29. Launch dates and prices for the UK and other markets were not immediately available.

The higher capacity drive will also be offered as an upgrade unit for gamers using current Xbox 360 models. It will cost $180 and will also be available on April 29.

The higher capacity drive will be especially useful to consumers downloading TV shows and movies from the Xbox Live online service.

The range of content available via the service in the US is set to grow soon with the addition of programs from A&E Network, ADV Films, National Geographic and TotalVid.com, Microsoft also said Wednesday.

Movie-studio Paramount Pictures also plans to begin offering high-definition content through Xbox Live. It will make available Braveheart, Team America: World Police, World Trade Center and South Park: Bigger, Longer & Uncut, and Warner Bros Home Entertainment will release direct-to-video movies exclusively in high definition on the service simultaneous with their availability on DVD. Titles will include Sublime and Babylon 5: The Lost Tales.