The news was unveiled on the first day of the Farnborough airshow, a key biennial event in the aviation sector calendar held southwest of London which sees Airbus battle with rival US giant Boeing for plane orders. (Agencies)
The A330neo, seen as a direct competitor to Boeing's 787 Dreamliner, will be available in two versions, the A330-800neo and the A330-900neo.
The jet will be powered by Rolls-Royce engines, Airbus said in a statement, adding it will be "the most cost efficient, medium range wide-body aircraft on the market".
The company added, "Airbus has launched the A330-800neo and A330-900neo, two new members of its wide body family, which will incorporate latest generation Rolls-Royce Trent 7000 engines, aerodynamic enhancements and new cabin features."
Airbus said the new A330neo would cut fuel consumption by 14 percent per seat, and that deliveries will start in the fourth quarter of 2017.
"The A330 is a very important margin contributor for our group. It's also one of the most reliable and efficient commercial aircraft ever," said Airbus Group chief executive Tom Enders.
Airbus has sold about 1,300 A330s, of which the vast majority is still in service since the model's launch in 1993. It is thought that the A330neo could potentially sell more than 1,000 units, according to Airbus.
In the absence of truly new technologies or revolutionary materials - such as light-weight carbon composites used in new fuel-efficient planes - the launch of a brand new passenger jet is not envisaged before five to seven years.
This has left Airbus and Boeing to modernise current models, such as the US giant's 777X, a new version of its jumbo that seats between 350 and 450 passengers.
Airbus and Boeing are also revamping their medium-haul A320 and 737 planes respectively.
Airbus separately announced that International Airlines Group, parent of British Airways and Spain's Iberia, had converted 20 A320neo options into a firm order, for delivery in 2018 and 2019.
The news was unveiled on the first day of the Farnborough airshow, a key biennial event in the aviation sector calendar held southwest of London which sees Airbus battle with rival US giant Boeing for plane orders.