Sony Ericsson announced today a new 8.1-megapixel camera phone as it takes the fight to the digital camera market head on.

The new C905, which will become the flagship Cyber-shot offering, will feature an 8.1-megapixel camera with Xenon flash and 2GB Memory Stick Micro included to store images on.

We got our hands on the new camera phone at the launch in London.