Following the usual rumours before such a move, Microsoft has now officially announced that it has cut the costs of the Xbox 360 consoles in Europe.

With official "estimated retail prices" now starting from £159.99, Microsoft has lowered the cost of its entire "family" of Xbox consoles.

The company says that now with an entry-level price of £159.99, Xbox 360 is a "mass market entertainment proposition" and is chasing the Wii's top spot as an affordable, family-friendly console.

From Friday, 14th March, the standard model, now called just "Xbox 360", which includes a 20GB hard drive and one wireless controller, will have an ERP of £199.99 - a saving of £50.

The Xbox 360 Arcade console, described as "perfect for those wishing to make their first foray into the gaming and entertainment world of Xbox", will have an ERP of £159.99 - a saving of £40.

The Xbox 360 Elite, which comes with a 120GB hard drive enabling consumers to store content downloaded from Xbox LIVE Marketplace as well as their own music, will have an ERP of £259.99 - a saving of £40.