Microsoft interactive entertainment business president Don Mattrick announced in a blog post that the US technology titan was surrendering in the face of outrage by gamers in the wake of last week's premier E3 videogame expo.
"The ability to lend, share and resell these games at your discretion is of incredible importance to you," Mattrick said in a message to gamers.
"Also important to you is the freedom to play offline, for any length of time, anywhere in the world."
He promised Xbox One will now let people "play, share, lend and resell" game disks the same way they can on current-generation Xbox 360 consoles.
Xbox One consoles will only need to connect to the Internet once, to set up systems, and users will then be free to play games offline.
"There is no 24-hour connection requirement and you can take your Xbox One anywhere you want and play your games, just like on Xbox 360," Mattrick said.
Sony's new-generation PlayStation 4 console scored an opening skirmish triumph over Microsoft's Xbox One last week at E3.
Sony and Microsoft each hosted distinct private events to spotlight their new champions in long-running console wars.
Both titans showcased blockbuster games, but Sony triggered unbridled cheers with assurances it would not interfere with sales of used titles or require Internet connections for play.
The points were in sharp contrast to Microsoft, which said at E3 that Xbox One consoles would need to check in online once every 24 hours for games to work, and set conditions on used games.
Sony also priced PS4 at $399, compared to the $499 Microsoft said it will charge for Xbox One consoles when they are released in the US and Europe in November.
(Also see: PS4 priced $100 cheaper than Xbox One)
Sony built on its E3 momentum with ads stressing the ease with which used games could be played on PS4 consoles.
"When a player buys a PS4 disk, they have the right to use that game, trade it in, lend it to a friend or keep it forever," Sony Computer Entertainment of America chief Jack Tretton said at the company's E3 press event.
Sony and Microsoft both plan to release their new videogame consoles in time for the year-end holiday shopping season.
Microsoft has sold some 77 million Xbox 360 consoles since they hit the market in late 2005. Console rival Sony has sold about the same number of PlayStation 3 consoles, which was introduced a year later.
(Also see: Xbox One vs PS4: Let the next generation games begin)
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