Sony will announce tomorrow that has bowed to consumer pressure by not only reducing the price of its 60GB console, but also creating a 40GB version priced at £299 to go up against the Xbox 360 Elite.

Confirmed by multiple sources in the games industry in the UK, Pocket-lint has learnt that Sony Europe will officially drop the price of the games console in the UK by £56 to £369 in an attempt to boost sales ahead of the Christmas rush.

"We are currently under strict NDA, however that NDA runs out in the next 48 hours", a retail source told Pocket-lint.

As part of the deal the newly introduced value pack, which included an extra controller and games, will be phased out, Pocket-lint has been informed by multiple sources within the industry.

"Although we aren't sure when in October it's happening we are aware that the price will drop to £369, with shops probably selling for £349, and a 40GB model launching as well to compete against the Xbox 360", a major games publisher told Pocket-lint.

In attempt to offer an even more compelling alternative to the newly launched Xbox Elite, Sony has also said it will be launching a 40GB "Core" version.

As previously rumoured, the new PS3 console will still feature the Blu-ray drive as standard, come with 40GB hard drive, Wi-Fi connectivity and a SIXAXIS controller, but it will lose two of its four USB slots and the memory card reader.

It will also lose the backwards compatibility chip, although this isn't likely to affect UK customers, as in Europe backwards compatibility is done via software.

The rumours of the new unit, which were broken by Pocket-lint last month, means that if you include the cost of buying the Wi-Fi adapter and HD DVD drive to the Xbox Elite, the move means the new PS3 will be £160 cheaper, although you will get a bigger hard drive with the Xbox.

The price will also make it one of the cheapest Blu-ray players available in the UK.

"Sony is clearly hoping to make a comeback against the Nintendo Wii, which is currently outselling the PS3 four to one", an industry insider told us.

STORY UPDATE: Sony has made this official, with the price of the 60GB £349, not £369 as we had been led to believe - follow link below for updated details.