Hundreds of copies of what is often regarded as the worst video game in history will be auctioned after being unearthed from a landfill site in the New Mexico desert in the United States.

The E.T. the Extra-Terrestrial cartridges were discovered by documentary filmmakers in Alamogordo, about 320 kilometres south-east of Albuquerque.

Members of the Alamogordo City Council have voted to offer some 800 of the Atari games found earlier this year for sale on eBay and the council's own website in the run-up to Christmas.

The failure of the ET game, based on Steven Spielberg's film, was a major factor in the collapse of the game's producer, Atari.

Some gamers speculated that thousands or even millions of the unwanted cartridges were buried in the area.

Who dumped the videos, how many they buried and why they did it inspired the dig and a documentary of the event by Microsoft Corp's Xbox Entertainment Studios.

Howard Scott Warshaw, developer of the E.T. game, signed old cartridges for journalists at the dig in Alamogordo. ( Supplied: Joel Stransky )

The unearthed games are under the custodianship of the Tularosa Basin Historical Society and stored at the New Mexico Museum of Space History in Alamogordo, south-east of Albuquerque.

Joe Lewandowski, who was the dig site supervisor, said the decision by the council to auction more than half of the games was like watching a "phoenix rising from the desert".

"It was like the beginning, end, and a new beginning for the video game industry when we found these games," he said.

He said the city planned to keep some of the remaining 500 or so games as mementos, and the rest of the cartridges will be donated to museums around the world.

"We've already heard from the Museum of Rome, which has a section for video games," he said.

Mr Lewandowski, who admits he does not play video games himself, said he became enthralled during the search of 9-metre deep, 12 x 30 metre site.

"To me, it was a treasure hunt," he said.

Atari accounted for 80 per cent of the international video games market in the early 1980s, having created console versions of arcade classics like Asteroids and Space Invaders.

But E.T. the Extra-Terrestrial was a design and marketing failure after it was rushed out to coincide with the 1982 hit movie.

Atari was believed to have been saddled with most of the 5 million game cartridges produced.

According to New York Times reports at the time, the game manufacturer buried the games in the New Mexico desert in the middle of the night.

Reuters