Microsoft looks set to finally unveil its new three-dimensional motion-control sensing camera at E3 early next month, according to a report in the The Wall Street Journal.

The report comes from unnamed sources - "people familiar with the matter" – with the Journal's Nick Wingfield reports that Microsoft is "developing a new videocamera for the Xbox 360 console that will allow players to control games with the movement of their bodies...an effort to attract the casual players who have fueled Nintendo Co.'s recent success.

"Unlike the Wii, the Microsoft camera won't require users to hold any hardware to control on-screen action, the people familiar with the matter said. The camera would sit near the television and capture when players move their hands, legs or head."

Microsoft and Nintendo are, unsurprisingly, not commenting on the report.

3DV Systems tech

Microsoft bought 3DV Systems earlier this year, an Israeli company that produces a camera that senses motion along the X, Y, and Z axes.

That deal was confirmed by VentureBeat's Dean Takahashi – about as reliable an Xbox specialist journalist as one can ask for – reported that the camera was "definitely" being used for a 360 device and that it the camera's "motion detection was accurate, much more so than with the Wii."

The Journal report follows rumours from Engadget earlier this month of a motion-sensing camera that allows "full body and hand gesture control of games [and] characters" and the ability to "kick, punch, duck, dive, [and] jump" and will recognise "hand gestures like pinching, grabbing, and scrolling" and allow live video conferencing and more."

In an email to the Journal Zvika Klier, chief executive of 3DV Systems, said "unfortunately I can't comment on the rumors surrounding this deal. ...We will provide more information when we can."

Stay tuned for further news, comment as E3 'rumour and hype' watching reaches fever-pitch over the coming weeks.