Microsoft has announced a brand new Xbox 360 peripheral, codenamed Project Natal. There’s no controller; Project Natal senses your body movements using a new kind of camera tech to sense depth and detect motion. Sound familiar?

Unlike previous console cameras, Project Natal can read full-body motion, projecting complex body movements into a game. The additional face recognition system will let you log in to your Xbox LIVE profile, just by stepping in front of the telly. Want more? A multi-array mic will allow Project Natal to respond to voice commands, even recognising a change in your tone.

On paper it sounds smarter than a QI Quiz master. In practise... it looked pretty darn impressive too. A live demonstration of a game called Riocochet showed off how some quite complex moves could work in a game environment, by bouncing balls off the player’s virtual body.

Other pre-prepared video trailers showed off a fighting, kicking a football, riding a skateboard and, oddly, someone fitting wheels to racing car. Yeah; we’re not sure about that one. But if Project Natal really can perform as well as it says on the tin, it’s should be a lot of fun.

It doesn’t have to be all games either. Microsoft also showed off a program called party paint, where you can slop paint around with your hands, calling out the colours you wanted. You can also create a stencil by forming a pose with your body, or anything else you care to use.

Drector Steven Spielberg joined Don Mattrick, senior vice president for the Interactive Entertainment Business at Microsoft, to make the Project Natal announcement. “It’s not about reinventing the wheel, it’s about no wheel at all,” he explained. He didn’t mention that there would be a camera pointed at said wheel, filming you make an imaginary wheel with your hands and... Nevermind.

Fable creator, Peter Molyneux, finished up the unveil with a more out-there application of the Project Natal tech. The Lionhead team have created a kind of artificial friend, in the form of a discomfortingly excitable young boy, which recognises your face, reads your expression and gets you to do its homework. Take from that what you will.

Microsoft is obviously planning big things with Project Natal. “This isn’t the game where you end up on the sofa using some pre-set waggle commands,” quipped Project Natal Director, Kudo Tsunoda. There’s something for Nintendo mull over ahead of its own E3 keynote tomorrow.

At this early stage, there's no inidication of price or release date, but rest assured there'll be more info coming.