Microsoft has started to ban modified Xbox 360 units from Xbox Live, describing the move as "an important part of our efforts to try and maintain a fair gaming environment for the large majority of gamers that play by the rules".
Gamers who modify their consoles typically do so in order to circumvent region protection, make use of homemade applications or pirated software or to gain an advantage over their online competition.
With this in mind, Microsoft is banning by system rather than Xbox Live account. Anyone whose modified console tries to connect to live will now receive an error ("Status Code: Z: 8015 - 190D").
"These users will not have their account automatically banned from Live, but they will no longer be able to access the service from the console they modified," Microsoft said.
The company has "a no tolerance policy towards inappropriate behaviour like hacking or cheating", and believes that "this topic is more important than ever given the recent release of the Halo 3 beta".
"We have stated in the past that customers can only enjoy access to the Xbox Live community through the use of a genuine, unmodified, Xbox console and we will continue to enforce this rule to ensure the integrity of our service, the protection of our partners and the benefits of our users," a statement on the global community Gamerscoreblog concluded.
Microsoft took similar steps with Xbox 1, with the result that modders created a switch that allowed gamers to enable or disable the modified features of a console depending on whether they wanted to access Live.
Current Xbox 360 modchips focus on firmware hacks for the Hitachi-LG and Toshiba-Samsung DVD drives that ship in Xbox 360s, and posts on Xbox-Scene.com - a hub of Xbox 360 modification - suggest that newer versions of the modifications with added security precautions are still being detected, so a running battle between coders in the days and months ahead seems likely.