The eight-inch device will retail for £269 and is the first product to be added to the firm's portfolio under new chief executive Tim Cook, who took over from co-founder Steve Jobs just before his death.

Analysts said Apple's move was due to the Amazon Kindle and Google's Nexus 7 grabbing a chunk of the lower end of the tablet market. Apple vice president Philip Schiller said: "It's not just a shrunken-down iPad. It's an entirely new design."

Lars Albright, co-founder of mobile advertising start-up SessionM and a former Apple executive, said: "Apple sensed early they had a real winner with the iPad and that has proven to be correct. They have a large market share and to protect it they have got to be innovative."

Apple also revealed its fourth-generation full-size iPad. Microsoft is expected to show off its own "Surface" tablet.