Sony are set to slash the price of their popular Playstation 3 console by £50, making the device available for around the £200 mark - with some supermarkets likely to knock a further £20 of again.

The move comes as gaming rivals Nintendo saw a spike in sales immediately after they made substantial price reductions to their Wii consoles and the newly released 3DS 3D handheld device. Nintendo cut the cost of their 3DS by 40% in Japan and sold 214,821 machines as a result of it. 

Sony will not be lowering the price of their handheld gaming device the PSP, but have announced plans to release a cheaper version that doesn't come with Wi-Fi.

Microsoft will be hoping that this latest move will buck the trend that has seen the Xbox 360 consistently outsell the Playstation 3 console over the past 12 months.

Sony Computer Entertainment Europe’s CEO Andrew House said ‘Our strategy is to provide the best quality entertainment experience at accessible prices. With PSP at £€99, Vita starting at €249 and PlayStation 3 at €249, we feel confident gamers can enjoy the incredible games available on PlayStation whatever level of investment suits their budget.’

Although the price drop is expected to initially boost the sales of the PS3 console, the announcement has provoked questions from the gaming industry as to the effect it will have on sales of Playstation's Vita tablet. Rob Crossley from the industry news wire Develop said ‘The problem is, while the new PSP price point makes that console very attractive, as a side effect it puts an unflattering light on the price point of the Vita.’