The new iPod is slightly thinner than previous models

The new iPod is cheaper than previous models, while battery life has been substantially improved.

Apple's iPod is the most popular digital music player in the world, with more than 50% of the digital music player market.

But it is facing growing competition from the likes of Sony, Creative and Rio, which seeking to tap into the popularity of digital music players.

The iPod has helped boost Apple profits, with 860,000 being sold in the past quarter.

Design changes

The new 20 gigabyte model, which can hold about 5,000 songs has a list price of $299 (�219 in the UK), while the 40GB model costs $399 (�299).

One of the big changes to the new iPod is the disappearance of the buttons that sat beneath its screen.

Sony is launching a digital music player to rival the iPod

The buttons have been moved to lie around the wheel used to navigate through menus, as in the iPod Mini.

A welcome change will be the boost to battery life. Apple said the new models could last up to 12 hours, compared to eight hours on the previous models.

Apple has achieved this through better power management rather than simply using a bigger, heavier battery.

The new iPod is also slightly thinner and its menus have been re-arranged to make navigation easier. The full-size iPods still only come in one colour: white.

The release of the new iPods will also see price changes. A top of the range model with a 40GB capacity will cost $399 and a 20GB model will be $299. Both are price cuts of $100.

In the UK, the 20GB model will cost �219 and the 40GB will be �299.

But unlike the previous versions, the new models do not come with a carry case worth �29 ($39) or a wired remote costing �29 ($39). The lower-end model also lacks a dock worth �29 ($39).

Rival players

"The best digital music player just got better," said Steve Jobs, Apple's chief executive.

The iPod is one of Apple's most successful products

But the computer maker played down rumours of an iPod with a larger hard drive.

"We have no plans in regard to announcing 60GB models," said Greg Joswiak, vice president of hardware product marketing.

"We are trying to create a much more compelling lineup with two models for 20 and 40GB at extremely compelling prices," he told the Reuters news agency.

The iPod has had a dramatic effect on Apple's bottom line. In financial statements for its third quarter released on 14 July, Apple revealed that profits were three times higher than 12 months ago.

The new iPod will compete with music players produced by firms such as Sony, Rio, Creative and iRiver.