MS: No plans to release Milo & Kate

Microsoft has apparently confirmed that Kinect game Milo & Kate is nothing more than a tech demo and won't be released.

Word comes from Microsoft mouthpiece Aaron Greenberg, who broke the news on an Australian TV show.

"Milo, he's safe and sound back in England," Greendberg told ABC's Good Game show (as reported by Kotaku).

"No... the Milo Project is something that Lionhead Studios in their labs had developed. Last year we unveiled the Project Natal technology, we showed a bunch of technology demos as part of that. And obviously [Milo] is a technology demo that continues to exist, but right now it's not a game that we're planning to bring to market."

If true, the news will disappoint many gamers who were wowed by Milo & Kate's impressive reveal at E3 last year.

The Lionhead Studios-created game uses the Kinect tech to allow players to talk to a young boy in a sophisticated fashion.

Concerns over the status of the project arose after its no-show at E3 2010 earlier this month.

Microsoft said at the time that it wanted to focus on launch titles for Kinect, due out in the UK this November.

Update: A spokesperson for Lionhead Studios gave us the standard "cannot comment on rumour and speculation", but we'll keep digging.