I am happy to announce that, as a part of a new Xbox 360 System Update, we’re expanding our integration with PayPal to allow U.S. and international Xbox LIVE users to make purchases on their Xbox 360 consoles with their PayPal accounts.* Once you’ve linked your PayPal account to your Xbox LIVE account on Xbox.com, you’ll be off and running to use it as a billing option, allowing you to buy content such as Microsoft Points, Xbox LIVE Gold subscriptions and Games on Demand titles.

We are rolling out the Xbox 360 System Update gradually to all Xbox LIVE users starting today and throughout the next couple weeks to ensure a high quality deployment. Just like any other update to our service, you will know you’ve received it when you turn on your Xbox 360 console, connect to Xbox LIVE and receive a notification to download the update. It’s important to note that it may take a few days to make its way around the globe. Thanks for your patience if you don’t get it right away!

This particular update will also bring an auto-standby feature that places your console on standby if it’s idle for more than one hour, helping to reduce power consumption. This feature will be available under Auto-Off in Console Settings after you download the update

Finally, thank you to all who participated in the preview program for this Xbox 360 System Update. Your contributions helped us prepare for the updated Xbox 360 disc format capability that comes with this release.

*PayPal functionality will not be available in the following Xbox LIVE regions: Brazil, Chile, Colombia, Czech Republic, Finland, Greece, Hungary, India, Japan, Russia, South Africa, South Korea, Taiwan

Edit: Updated to clarify the auto-standby feature