Microsoft has announced the introduction of a new rewards program for Xbox Live Arcade called Avatar Famestars.

The program will allow players to earn rewards for their avatars and accumulate “Famestar points” by completing challenges across multiple XBLA titles.

According to Microsoft, the Avatar Famestars program will include weekly and one-time challenges, and provide players with avatar rewards such as new outfits and items. Players will be able to carry these rewards over from one game to the next.

Avatar Famestars will launch this week with the release of Iron Galaxy’s Wreckateer, part of Microsoft’s Summer or Arcade annual promotion.

The avatar rewards program will also be added to Full House Poker and A World of Keflings, as well as upcoming titles including Fire Pro Wrestling, Homerun Stars and Avatar Motocross Madness.

Final Fantasy Versus XIII has not been canceled, Square Enix president Yoichi Wada said over Twitter today. A translation byKotaku confirms the executive recently saw a build of the project during a meeting, and was very impressed by it.

“There’s someone making a false rumor that Versus was cancelled. Haha…Just a minute ago, the regular Versus meeting ended,” he said. “If you saw the presentation of the city, it’d knock you off your feet – lol.”

Rumors that the game had been canceled were sparked last week when Kotaku cited unnamed sources saying that work on the project had quietly ended a few weeks ago. The project was absent from June’s Electronic Entertainment Expo, as well as the most recent Tokyo Game Show.