Photos: Apple iPad 2 unveiled by Steve Jobs

The iPad 2, seen above side on, is a third thinner than the original iPad and slightly lighter. It has a 1.2GHz dual-core processor - a new chip called the A5, which Apple said will have up to double the processing power and up to nine times faster graphics performance.

There's also a gyroscope and front and rear-facing cameras, as many analysts had expected.

Jobs said the cameras are for video, extending Apple's iPhone 4 and iPod touch FaceTime video-chat service to the tablet.

The iPad 2 will go on sale in the US on 11 March, followed by 26 other countries - including the UK - on 25 March. The price tag remains unchanged from the original iPad - with $499 for the bottom-of-the-range iPad 2. Battery life is also unchanged from the iPad's 10 hours and more than a month on standby, said Jobs.

Jobs also announced an update to iOS - iOS 4.3 - which includes FaceTime for iPad, improved Safari browser performance, wireless streaming to Apple TV via a feature called iTunes Home Sharing, and the ability to create a personal wi-fi hostpot to share 3G connectivity between Apple devices.

iOS 4.3 also includes Apple's Photo Booth software and the ability for users to choose either mute or rotation lock as the function for the hardware slider key on the side of the device.

The iOS update will be rolled out as a free update to iPad, iPhone 4, iPhone 3GS and iPod touch users on 11 March, said Jobs.

Jobs' appearance at the iPad 2 launch was a surprise as the CEO is currently taking a leave of absence from the day-to-day running of the company on medical grounds. "We've been working on this product for a while and I just didn't want to miss today," he said.

Salesforce.com CEO Marc Benioff also made an appearance at the launch, speaking up for the iPad's business potential in a promo video. "This device is how we are going to run the future of the enterprise," he said.

Apple rounded off the launch event by announcing and demoing new iMovie and GarageBand apps for iPad.

The company will also be selling an HDMI output connector to hook iPads up to TVs for presentations, and new screen covers for the iPad 2 - called smart cases - that attach directly to the iPad via magnets and can be folded to stand the device up to watch video or at an angle for typing.

The iPad 2 will continue Apple's stranglehold on the tablet market according to Forrester Research, which predicts the device will account for 80 per cent of US tablet sales: of the 24 million sold in the US this year, 20 million will be iPads.

Forrester analyst Sarah Rotman Epps said in a blog that the competing products announced so far from HP, Motorola, RIM and others, "while impressive, have fatally flawed price and distribution strategies". She added: "For now, Apple still defines the tablet market, with a product consumers will desire at a price that's hard to beat."

But, she added: "The tablet wars are far from over. We have yet to see a play from potential disruptors like Amazon, who could enter the tablet market at a lower price point, or Sony and Microsoft, who could offer radically differentiated value propositions."