Speaking with T3 magazine during E3 this week, Microsoft's Neil Thompson has denied that the company is working on a portable Xbox.

"We're not even thinking about that at the moment. Handhelds, in the way you would think about a handheld like a PSP? No." Thompson stated. He went on to say, "the mobile phone market offers us a really good opportunity to capitalise on the hundreds of millions of handsets that are out there, and give people a chance to connect that with other entertainment experiences".

The rumours of a portable Xbox have gained ground in recent weeks with the assertion in Dean Takahashi's book "The Xbox 360 Uncloaked: The Real Story Behind Microsoft's Next-Generation Video Game Console." that a portable Xbox is in development.

(Thanks to Pro-G for the heads-up.)