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He gave a nod to one of the biggest failings of the hardware - it's reliance on a computer - and dubbed the rejuvenated approach as Apple TV Take 2.

The existing Apple TV hardware is eligible for a free software update that includes a completely new user interface. The hardware can still talk to computers, but now operates as a standalone device, allowing users to purchase music, movies and TV shows, as well as download audio and video podcasts direct to Apple TV. Purchases are automatically synchronised back to a Mac or a PC.

The new interface presents a two-level menu. On the left are movies, TV shows, music, podcasts, photos, YouTube and device settings. The right column changes according to what is selected in the left.

It's a much more determined push into the living room than the original iteration of Apple TV. Browsing the rentals portion of the iTunes Store, plenty of information is given about each film, including actors and directors,

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and lists of titles rented by other viewers. The rentals page shows how many days or hours are left before a rented movie will expire, and a percentage for those that are still downloading.

Jobs showed Live Free or Die Hard (Die Hard 4.0 in the UK) as an HD rental, and it looked beautifully crisp even on the large display at the Keynote.

The on-screen keyboard lets the user search for content, with a live update of search results shown to the right.

As well as movies, the revised Apple TV software also connects to photo galleries on Flickr and .Mac, as well as movies uploaded to .Mac from iMovie, so you can share your holiday snaps and movies with other Apple TV owners very easily. When browsing a user's Flickr photos, links are provided to their friends' photo galleries too.

The price of the Apple TV has also been reduced from $299 to $229, and hardware will ship with the new software pre-installed in two weeks.

Jim Gianopulos, Chairman and CEO of 20th Century Fox, was welcomed to the stage and, while he conceded that Video On Demand is not new, he stressed that he believes Apple's approach with Apple TV and iTunes rentals, "...will be a transformative version of the rental model." He also talked about the new Fox Digital Copy system that debuts on Fox's Family Guy: Blue Harvest DVD today in the US (next week in the UK). An iPod version of the movie is supplied on the disc, making it easier for consumers to watch a movie bought on disc wherever they choose. It requires iTunes 7.6, which also launched today.