After its E3 press conference, Microsoft announced during a press lunch that full game downloads will be available on demand for the Xbox 360 starting in late summer. Available games will include BioShock, Assassin's Creed and Oblivion -- currently all full-disc titles.
Thirty games will be available at the start of the service in August. It's not clear yet whether these will be 'classic' 360 titles or more recent releases. Considering the bandwidth drain that downloading games will cause, it seems likely older titles that are in lower demand will initially be supplied.
For these on-demand purchases, direct credit card charges will be accepted, in addition to Microsoft Points. Games will be priced to match retail prices, meaning that, for now, no disc-free discount will be applied.
Microsoft hasn't yet specifically confirmed that these downloads will be available in the UK.