Xbox 360 owners will be able to view Foxtel programs via the Xbox LIVE service as part of a new deal by the end of the year.
Along with a range of video on demand offerings, channels to be included in the deal are FOX Sports,Disney, MTV, Discovery and Nickelodeon.
The move is the first time Foxtel will be available without a dedicated set top box.
In a statement, Foxtel managing director, Kim Williams, described the partnership as an "exciting new frontier".
"Foxtel by Xbox LIVE will provide our 1.6 million subscribing households, as well as new customers, a transformative way of receiving and enjoying Foxtel over the internet," Williams said. "We will offer Foxtel by Xbox LIVE with various packages and prices and under flexible agreements.”
For its part, Microsoft said Australians have spent more than 106 million hours on the XBOX Live service and the vendor was close to selling one million Xbox 360s in Australia.
"Packages and prices, the full channel line-up, and further product details will be released publicly closer to the service launch," the release statement said.