At a special event in Tokyo, company bosses revealed what they are officially calling the NGP or Next Generation Portable.

There were no details on how much it is likely to cost but it is expected to be out sometime towards the end of 2011.

The NGP is being launched into an increasingly competitive market with Nintendo's 3DS out soon and a boom in mobile gaming on smartphones.

The device boasts a 5-inch OLED touch screen screen as well as Wi-Fi and 3G connectivity to enable people to download games and other content.

The oval design (182.0 x 18.6 x 83.5mm) also features a rear panel touchpad to control certain actions and a motion sensor.

There is a front and rear camera too plus the traditional navigation buttons and, for the first time, dual analogue sticks.

Sony hope the NGP can rival Nintendo's DS

Executives at Sony hope the new features will be good enough to win over gamers.

Its predecessor, the PSP, was launched in 2004 and to date has sold 65 million units.

But that is less than half the number of sales of Nintendo's DS (136 million).

Nintendo are also launching the world's first 3D handheld games console in March, the 3DS.

The 3DS has generated a huge amount of hype, partly because users don't need special glasses for the 3D content to work.

Meanwhile smartphones are also fuelling a boom in mobile gaming leaving some experts wondering whether specific handheld games consoles are becoming redundant.