Microsoft has announced that its Xbox Live service now has 10 million subscribers thanks largely to a very successful sales period at the end of last year.

The software giant said that 4.3 million Xbox 360 consoles were sold worldwide during the last quarter of 2007.

Marc Whitten, general manager for Xbox Live, added that these figures helped break a number of records, including the largest sign-up of new members to Xbox Live in its five-year history.

However, this achievement was marred by problems over the holidays when the Xbox Live service experienced sporadic but widespread service interruptions.

Microsoft apologised for the hiccups, and offered all subscribers a free Xbox Live Arcade game as compensation.

This gesture was not good enough for some users, however. Three Texas residents have filed a class action suit against the company claiming breach of contract.