Microsoft is to cut the UK price of its Xbox 360 Elite gaming console by £30 to £199.99 and by $100 to $299 in the US.

But the price of Xbox's entry-level model the Arcade will rise to £159.99 from £129.99, although its US price remains the same at $199.

The cut follows Sony's decision to drop the price of its PlayStation 3, to £249 in the UK and $299 in the US.

The Xbox Pro mid-range model will be discontinued altogether, priced at $249 (£154) until it sells out.

Recent figures suggest that overall sales of both games and consoles have slumped this year - with a drop of some 29% in the US.

However, Xbox sales are the only console in positive growth in the US this year, rising by 17%.

The new prices will come into effect on Friday, ahead of the release next week of the recently announced slimmed-down PlayStation 3.