Nokia has unveiled a new smartphone with a 41-megapixel camera in its latest bid to catch up with its rivals.

The mobile phone company said the Lumia 1020 will allow users to zoom in and reframe their photos without worrying about the image quality suffering.

Speaking at a launch event in New York, live streamed to viewers around the world, Nokia chief executive Stephen Elop said the handset - which is available in yellow, black and white - can capture pictures and video of "amazing quality and amazing clarity".

"Today I'd like to introduce to you all to the next chapter in smartphone photography," he said.

"The Nokia Lumia 1020 will change how you shoot and how you create forever."

Nokia's latest high-end smartphone was revealed as the Finnish firm battles to arrest a steady decline in demand for its devices and reclaim ground lost to rivals Apple and Samsung.

The iPhone 5 currently boasts an 8-megapixel camera, with the next Apple offering expected to feature 12-megapixels.

A UK release date for the Lumia 1020 was not confirmed but the phone will be available in the US from July 26, priced at $299.99 dollars.

Nokia has said it plans to release the new device in Europe during the current quarter.