He said it was a "revolutionary" product that was between a laptop computer and a smartphone and was "awesome" for watching films and TV shows.

Speaking at a news conference in San Francisco, Mr Jobs said: "We want to kick off 2010 by introducing a truly magical and revolutionary product.

"All of us use laptops and smartphones now.

"The question has arisen lately - is there room for a third category of device in the middle, something between the laptop and the smartphone?"

And then, to a round of applause, he showed off the new iPad, which has an on-screen keyboard, is half an inch thick (1.3cm) and weighs 1.5lb (0.7kg).

But after all the hype surrounding the launch, investors appeared to be slightly underwhelmed by the unveiling.

Apple shares dropped more than 2% to a session low of $200.11.

Mr Jobs said the device, which has a 25cm colour screen, is "so much more intimate than a laptop and so much more capable than a smartphone."

Dressed in his trademark blue jeans and black turtleneck, Mr Jobs demonstrated some of the features of the iPad.

He said they include browsing the internet, playing games, listening to music and watching high-definition video.

"We've got movies, videos, TV shows," the chief executive added.

"We have been able to achieve 10 hours of battery life," he said. "I can take a flight from San Francisco to Tokyo and watch video the whole way on one charge."

Also at the launch, he announced the launch of an online bookstore dubbed "iBooks" for the iPad and is set to take on Amazon's Kindle device.

"We've got five of the biggest publishers in the world supporting us and will open the floodgates for the rest of the publishers starting this afternoon," Mr Jobs went on.

Earlier in the day, Sky News revealed that an official prototype of the device has been used by a UK design company to develop software.

Brandwidth were given the device to help them develop applications for Guinness World Records using some of the confirmed software features.

Dean Johnson, from Brandwidth told Sky News: "We've been told 'tablet' is simply the working title of the device because of the platform, but iPad is the front runner for the official name.

"We were given this prototype by Apple in December to help us develop software for Guinness.

"It's not the final version by any means, but it showcases some of the features of the digital publishing hub that the device will become.

"It has all the usual goodies you would expect from Apple, but the publishing will bring all that live. It's an ideal piece of kit."

Bandwidth revealed that device will run on an extension of the iPhone operating system.