Sony has cut the price of its Playstation 3 console across Japan, Europe and American, effective immediately.

It said the price of a 160GB console in Europe would be cut from €299 to €249. This equates roughly to UK consoles falling from £250 to £200.

The price of the 320GB system will fall from €349 to €299, Sony said at a press conference at the GamesCom event in Cologne.

Since its release in 2006 the PS3 has sold over 50m units and there are now around 2,500 games available for it.

The consumer electronics giant is also set to launch a new cheaper version of its PSP handheld console, costing around €99.

Andrew House, CEO of Sony Computer Entertainment Europe, said: "Our strategy is to provide the best quality entertainment experience at accessible prices".

The cuts come as Sony faces increased competition from Microsoft's Xbox360 as well as suffering a highly-publicised hacking attack on its online gaming service, PlayStation Network.

The hackers gained access to the personal information for 77m customer accounts and led to the service being shut down for a month.

Sony posted a net loss of 15.5bn yen (£122m) in the three months to June after the earthquake and tsunami hit production at its factories.

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