The Family Timer can monitor the amount of time spent on gaming and entertainment on a daily or weekly basis.
"It is Microsoft's responsibility to provide parents with tools to manage their children's video gaming and online experiences, and we have made that a priority from the very start," said Robbie Bach, president of the Entertainment and Devices Division at Microsoft.
Bach explained that the Xbox 360 Family Timer is similar to its counterpart in Windows Vista.
Notifications warn the gamer that the session is nearing the end, and the console is automatically turned off the when a pre-determined time limit has been exceeded.
The feature will be available for download on the Xbox Live online service in early December.
Microsoft also announced the Xtival '07 festival of gaming on Xbox Live from 23 to 26 November. All European Xbox users will be given free Gold membership of the service for the four-day event.
"In addition to the chance to log-on and play your friends online for free, there is an amazing line-up of events with themed gaming activities and the chance to take on stars from the world of music and video games," a Microsoft statement said.
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