According to 1up, Microsoft have increased the file size limit for Xbox Live Arcade titles from 50MB to 250MB, with further reports suggesting that Microsoft will be eventually extending it to 450MB.

The extension to the file size comes following the announcement of Konami's Castelvania: Symphony of the Night which will take up 96MB on the hard drive. This means that developers can now be more ambitious with titles, although those gamers without a hard drive may not be able to fit some future Xbox live arcade games onto their 64MB memory cards.

Microsoft have remained tight-lipped on the rumours:

We do not comment on rumour and speculation, and so we can not confirm that rumour. Aside from the exception we granted for Castlevania: Symphony of the Night, we have not announced any plans to alter the file size standard for Xbox Live Arcade games. However, adjusting the size limit is certainly an option in the future, and as always, we are listening to feedback both from gamers and developers on what will provide the best user experience. Whatever choice we make, we will hold a position that provides for the best possible Xbox Live Arcade gameplay experience."

Sony currently have no restrictions on the size of their downloads - we're sure Microsoft will want to keep up with the opposition!

Source: 1UP