Microsoft announced today that the free XBLA game promised as a form of compensation for the recent Xbox Live downtime and connection problems users have had experienced over the past few weeks, will be Chair’s XBLA shooter Undertow. The game features a 15-level single-player mode and a co-op campaign with two multiplayer modes for up to 16 participants.

Beginning next Wednesday through Sunday, all Xbox LIVE members (Gold and Silver) around the world will be able to download the full version of the Unreal Engine 3-based game, free of charge. For those who already own Undertow, Microsoft hasn’t announced any current plans for a substitute game or refund other than they should contact Xbox support.

As for the Xbox Live issues, Microsoft says that they have “implemented several improvements to the service, to help ensure ongoing reliability and performance.”