Intel, the world's largest chip-maker, has said it will let Western consumers buy a low-cost laptop originally designed for poor children in the developing world.

The US technology giant said it would team up with PC makers to release a new version of its Classmate PC, which sells in developing countries for $285 (£144), in the US and Europe - possibly by Christmas.

The company did not say how much the device will cost, but analysts suggested that it could go on sale for as little as $500 (£252), and would bring new momentum to the shift towards low-cost computing at a time when consumers will be watchful about spending.

Intel's new laptop, which has been trialled at schools in Texas, Oregon, and California, will join a string of low-cost computers to have entered Western markets in the past year. Asus's Eee PC, which retails for £215 in the UK, has been popular since going on sale at the end of last year, while Elonex, a British firm, last month unveiled a new cheap laptop called the One, which will cost just £99.

The One Laptop Per Child (OLPC) project, which originally hoped its computers would cost $100 but now sells them for $188 (£95), also recently announced a 'Give one, get one' scheme in the US, where customers buy two computers for £200, one of which is donated to a recipient to the developing world.

The average cost paid for a laptop in the UK last year was £477, according to the retail analyst GfK.

Intel is already selling its original Classmate PC in India, Mexico, and Indonesia, and while fewer than 100,000 have been shifted so far, the company said it plans to ramp up production in 2008.

The main reason such machines are so cheap is that they run on open-source software such as Linux, meaning manufacturers don't have to pay licence fees to companies such as Microsoft. They also typically have smaller screens, run on older chips, and dispense with certain features, such as CD drives.

Manufacturers tend to focus on features deemed most useful at schools in poor countries, such as simple word-processing and web-browsing software, and, in the case of OLPC's 'XO' machine, a wind-up crank which generates power and a screen which can be seen in bright sunlight.

Intel's new Classmate design would give manufacturers the flexibility to build a range of laptops with different memory and screen sizes, and peripheral devices such as cameras, the general manager of the company's emerging markets platform group said.

Intel would not say which manufacturers will produce the device.

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