Nathan Vautier, managing director of Sony Ericsson UK, said the new Satio phone, which will hit the shops in October, is a "game-changer" which will "help return the company to profitability".

Sony Ericsson, the world's fourth-largest maker of mobile phones, dived to a €370m (£325m) loss in the first three months of this year as demand for its handsets dropped by 35pc.

Worldwide mobile phone sales fell by a record 8.6pc in the first quarter of the year to 269m. Experts at Gartner, the mobile phone research house, said so-called "mid-market" phones – an area traditionally dominated by Sony Ericsson – suffered the deepest decline.

At the same time, demand for smartphones, such as the iPhone and Nokia's 5800, is booming, with sales expected to rise by 27pc this year.

The Satio – previously code-named Idou – has a 12 megapixel camera, free access to Hollywood movies and a touch-screen keypad.

It will be available for free on £35 per month contracts with all the UK's mobile phone operators.

Sony Ericsson also launched two other handsets – the Aino and Yari – which the company said will "revolutionise" mobile phone gaming and audio experience.

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