The deal between BSkyB and Microsoft covers the UK and Ireland and will give Xbox console owners hooked up to broadband, access to Sky's online TV service, Sky Player.
It could open up a significant new market for Sky, giving it access to people in the UK and Ireland who do not subscribe to satellite TV or have a PC to access its Sky Player.
Sky Player offers a range of live pay TV channels, including Sky Sports, and an on-demand library of thousands of programmes spanning entertainment, movies, documentaries, kids, culture, news and sport.
The deal extends the broadcaster's strategy of tapping into a range of different platforms to reach audiences, while Microsoft can rightly claim the lead in the market to establish a broader multimedia entertainment role for games consoles in the home via its Xbox Live service.
The Microsoft and BSkyB announcement follows a similar deal last year between Nintendo and the BBC to make its video-on-demand service, iPlayer, available via Wii consoles. The iPlayer is also available on Sony's Playstation 3.
As yet no pricing details have been released although it is thought that the Xbox service will be similar to the charges currently in place for PCs and Macs where people can subscribe to packages of TV for as little as £7.50 a month.
Neil Thompson, head of Xbox UK and Ireland, said: "Our customers have told us that they want the opportunity to use their consoles as a way to access TV and once again Xbox has pulled off an entertainment first with amazing content and rich interactive experience."
Stephen Nuttall, director of Sky's commercial group, added: "Now Xbox owners can enjoy a wide range of TV through their console and can pick and choose the packages that are right for them. For Sky, this makes our content even more widely available and opens up a new commercial opportunity."
Sky Player TV was launched in December 2008 as a dedicated online subscription TV service, providing an alternative way to subscribe to Sky TV. It means customers can watch Sky shows, which also include 'Lie to me' starring Tim Roth and 'House' starring Hugh Laurie both on Sky 1.
As well as Sky's own content, Sky Player gives access to a wide range of channels that includes Sky Movies, Sky News, The History Channel, National Geographic, the BBC, UK Gold, Eden, MTV One, Disney Channel and Nickelodeon, among others.
Elsewhere today BBC Worldwide announced a deal with Microsoft in the US that makes some of its most popular programming available to purchase and download for the first time from the Xbox Live and Zune Marketplaces.
The launch includes a number of shows that are broadcast on BBC Worldwide's US cable channel BBC America including 'Top Gear', 'Doctor Who', 'Torchwood', 'Little Britain' and 'Primeval'.
Beth Clearfield, vice president of digital media and business development, BBC Worldwide, America, said: "We believe our engaging award-winning programmes are a perfect fit for the impressive Xbox Live Marketplace and Zune Marketplace experience."
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