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The service, which launched in the US on Tuesday, will be rolled out internationally later this year.

It will work on Macintosh, Windows-based machines, iPhones, iPods and the Apple TV set-top box. News of the service led to shares in Blockbuster plunging nearly 17%. It will also compete with pay-per-view film services on cable and satellite.

The computer giant will make more than 1,000 regular definition and about 100 high-definition movies available by the end of February. It will charge $3.99 for new releases, $4.99 for new releases in high-definition and $2.99 for older movies.

Consumers can store the movie for 30 days, but can watch the movie only during a single 24-hour period.

At the same time, Apple also unveiled a sequel to its year-old, unsuccessful AppleTV in the form of a set-top box designed to play those movies on a high-definition television set.

The older version of AppleTV required a computer connection. But the newer version connects directly to the internet and allows consumers to select movies and TV shows to watch directly from their TVs.

Steve Jobs, Apple CEO, said of the latest move to marry television and the internet that all involved had missed opportunities:

"We've all missed [opportunities]. No one has succeeded yet. We learned that what people really wanted was movies, movies, movies. And we weren't delivering that. So we're back," Jobs said.

Tom Lesinski, president of Paramount Pictures Digital Entertainment, said the Apple movie service would prove to be a benchmark for the idea of downloading movies on the television. "All the barriers that have existed with other solutions pretty much go away now," he said.

Current Paramount releases which could find themselves on the service include Sweeney Todd and Cloverfield, while recent DVD releases include Blades of Glory and Transformers.

Apple's move marks the first serious attempt at offering consumers an extensive library of films to choose from in a convenient system, as it did with iTunes.

However, many industry commentators believe cable and satellite companies may be in the best position to combine the internet and television, since their set-top boxes already sit in millions of homes and already offer pay-per-view films.

Apple boss Jobs announced the service at a Macworld Conference and Expo in San Francisco, in which he also unveiled a range of new products including an ultra-slim notebook called the MacBook Air.

The laptop is extremely thin - at the narrowest point it tapers to just 4mm (0.16 inches), about the width of a pencil. In his demo, Jobs pulled it out of an A4-sized enveloped, much to the collective amazement and delight of the crowd.

Apple has incorporated several of the 'touch' controls that it introduced on the iPhone into the mouse pad at the bottom of the keyboard. It will cost £1,199, several hundred pounds more than the cheapest MacBook.

On the negative side, the battery cannot be removed, meaning that business users on flights will be limited to its five-hour life. The notebook's lack of a disc drive is compensated by its wireless capabilities, with users able to stream CDs and DVDs.