UK sources claim a price-reduced 60GB PlayStation 3 will be announced tomorrow, alongside news of a stripped-back 40GB edition.

Sony is facing an uphill battle against Xbox 360 and Wii at the moment; the latter reported to be outselling PS3 by 4:1 or thereabouts. Tomorrow Sony will announce a price drop of £56 for the existing 60GB PS3 and also confirm the arrival of a £299 40GB PS3 to compete directly with Xbox 360. The latter will have only two USB ports and no memory card reader, but will retain Blu-ray playback and built-in Wi-Fi connectivity.

Reputable gaming website Pocket-lint broke the news this morning, pointing to several UK retailers breaking NDA as credible soothsayers.

Sony is going for the knockout punch here offering approximately £160 of value above the Xbox 360 Elite which does not include Wi-Fi or a High Definition movie player fitted as standard. One thing all Xboxes have, however, is an enviable line up of games that PS3 still struggles to match. If / when the revised PS3s hit UK retail the existing Value Pack (extra SIXAXIS plus games) will be taken out of circulation.

Our Sony contact issued a firm "no comment" on the story at the time of writing.