Microsoft has confirmed that it plans to launch a new streaming music service at the end of July.

The news will see the software giant offer a new streaming and download service in the UK to replace the now defunct offering it had with Peter Gabriel's 0D2 service since bought by Nokia.

"In the coming months, MSN is planning to launch a new music streaming service in Beta via its Music channel", Peter Bale, the executive producer of MSN, Microsoft's news and entertainment portal told Pocket-lint.

Unfortunately he then added: "At this stage we won't be confirming the detail behind this but more information will be available soon and will be communicated in due course".

The announcement could open up further possibilities with a tie-up hinted at connecting the service to the Zune MP3 player and the company's gaming console, the Xbox 360. However the service could struggle when it does eventually come to market unless it has any extra compelling services above and beyond the current market offering.

“We are looking at how other similar businesses have structured their business models and trying to figure out what will work best for both consumer and Mircosoft", Bale told The Telegraph in an interview.

London-based Last.fm already has multiple mobile applications, though it's had some difficulties licensing tracks for mobile playback. Swedish streaming service Spotify has apps in development for multiple platforms, but is yet to release anything to the public beyond demo videos.

Some commentators have suggested that better 3G and 3.5G coverage will be necessary before mobile music services can get widespread. Streaming music requires a lot of bandwidth, and degrading the audio quality has proved unpopular with listeners.

If Microsoft is able to match or exceed the quality, speed and catalogue of Spotify's desktop offering in a mobile format, it seems likely that consumers will flock to it in the same way they have to Spotify. It'll be interesting to see how the company approaches such a competitive marketplace.