The free XBOX Live Arcade game promised by Microsoft as compensation for the issues Xbox LIVE service was experiencing over the past month has been announced.

Undertow (normally 800 Microsoft Points) will be available to download by XBOX Live Gold and Silver members from Wednesday 23rd January at 10:00 2008 till Sunday 28th January 2008 at 08:00 (Pacific Standard Time Zone) for free.

Here is the official letter from Microsoft:

An Open Letter from Marc Whitten about Xbox LIVE this Holiday
Published January 3, 2008

Dear Xbox LIVE Members:

During this past holiday season you helped us break a number of Xbox LIVE records. This included our largest sign-up of new members to Xbox LIVE in our 5 year history and just yesterday you broke the record for the single biggest day of concurrent members ever on the service.

As a result of this massive increase in usage we know that some of you experienced intermittent Xbox LIVE issues over the holiday break. While the service was not completely offline at any given time, we are disappointed in our performance. I would like to take this moment to thank each and every one of you for your patience and understanding as our team has worked around the clock to return the service to a stable state.

At the same time we would like to offer a token of our appreciation to all of you in celebration of record success for the service. And as a thank you for your loyalty during this holiday period, we will be offering all of our Xbox LIVE members around the world access to a full Xbox LIVE Arcade game that will be available to download free of charge. In the coming weeks we will be sharing the specific details of this offer with you.

Thank you again for helping make Xbox LIVE everything that it is today!

Sincerely,

Marc Whitten
General Manager, Xbox LIVE
Gamertag: Notwen

Updated January 18, 2008

We’re pleased to announce that from 2:00 a.m. PST Wednesday, January 23, 2008 through 11:59 p.m. PST, Sunday, January 27, 2008 you can download the full version of the recent Xbox LIVE Arcade game, Undertow free of charge.

Developed by Chair Entertainment Group, Undertow is one of the highest-rated and best looking games available on Arcade. Undertow redefines aquatic based shooters through a mix of high-definition graphics, intuitive controls and multiple modes of game play action. The game features a full story driven-single player campaign, on and offline co-op, and multiplayer for 2-16 players over Xbox LIVE for Gold subscribers. Players battle for control of the oceans as one of three selectable races, each with four unique, upgradeable units.

Major Nelson announced at his blog that users who already purchased the game should contact Xbox Live support (800-4MY-XBOX), and they’ll be “taken care of.”

[source]