Microsoft is to launch an upgraded version of its Xbox 360 console in April 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 (PS3).

The Xbox 360 Elite will cost about $480 (£245) in the US when it’s released on 29 April, compared to the $499 ($255) price tag of the low-end PlayStation 3 console. Details about the UK release date and price have not been announced.

The hard-disk drive in the new version can accommodate up to 120GB of data, six times that of the drive on current models and twice as much as the 60GB PS3 currently available in the UK. 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’.

The Xbox 360 has been on sale for more than a year and it was the first console to offer high-definition gaming although it's now sharing that distinction with Sony’s PS3. Both consoles are also battling with Nintendo’s Wii, which has proved surprisingly popular among consumers thanks to its innovative movement-sensitive controller. The Wii doesn't offer high-definition.

The higher capacity drive will also be offered as an upgrade unit for gamers using current Xbox 360 models. It will cost $180 (£92) in the US. It 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 programmes from A&E Network, ADV Films, National Geographic and, Microsoft said today.

Despite the price premium for the PS3, Sony announced yesterday it was the highest-ever selling console in its history in the UK, based on the first weekend of sales.

See PC Advisor's Xbox 360 and PS3 reviews.