The major players in the battle for the video games market engaged in a war of words when they came together for the industry's main trade conference on Tuesday.

The president of Sony's US arm told cheering crowds at the E3 expo in Los Angeles that its Playstation 2 console had won the war against Nintendo's GameCube and Microsoft's Xbox.

Sony's Playstation 2 is the console market leader

But a Nintendo spokesperson said: "I think they know now the battle is on," while Microsoft announced it was pumping $2bn (�1.4bn) into improving its Xbox.

Sony has sold millions more consoles than its competitors - but it has been on the market for about a year longer than the other two.

"Officially, the console wars are over," Kaz Hirai, president of Sony Computer Entertainment of America, said.

He told a crowd in a movie studio that Playstation 2 sales had shot up again since its price was dropped by $100 in the US the previous week.

He said major retailers had seen five- to eight-fold sales increases since the cut.

About 3.5 million Xboxes have been sold do far

More than 30 million PS2s and 160 million games have now been sold worldwide.

Mr Hirai unveiled Playstation 2's new slogan: "Live in Your World. Play in Ours."

He also said Sony would be developing the PS2's online gaming capability and that 35% of its users had high-speed internet access.

They will be challenged by Microsoft, who said a large part of its $2bn investment would go to building the Xbox Live, dedicated to broadband gaming.

Sales of the Xbox were seen to have been sluggish at first, but a price cut has helped it sell 3.5 million.

GameCube launched in Europe in May

"Playstation had a one-year head start on Xbox," Microsoft marketing director John O'Rourke said.

"I can tell you that next time the competition won't get a one-year head start on us."

Nintendo has said its users are less interested in playing over the internet, and is trying to beat its competitors by promoting the range and quality of games and the overall gaming experience.

It introduced a new wireless game-pad, the WaveBird, which was being played by the creator of the hugely successful Mario game series, Shigeru Miyamoto.

He was playing Super Mario Sunshine, the next in a long line of hit Mario games.

Budget increase

"GameCube in this market is currently showing a healthy momentum," according to Peter MacDougall, executive vice president for sales and marketing for Nintendo of America.

He said the marketing budget for the rest of 2002 would be 25 percent larger than the same period in 2001.

E3 - or the Electronic Entertainment Expo - has brought together about 62,000 video and computer game programmers, marketers and other game industry professionals.

The industry has become a huge earner world wide, defying the technology slump to bring in an estimated $9.4bn (�6.4bn) in US sales during 2001 - a 40% jump from the 6.6bn (�4.5bn) spent in 2000.