Some exciting news has just broken. Remote play has taken a step forward. The 2.10 Playstation 3 Update combined with the PSP 3.80 Firmware Update, allows for all Playstation 1 titles to be played via remote play. Read more about it after the jump.

Before this update only Playstation 1 titles that had been downloaded from the Playstation Store could be played on the PSP, along with Lair and some PSN titles, such as High Stakes Poker and the upcoming PixelJunkMonsters.

Rumour now has it that your downloaded PS1 games and PS1 Game Discs can be played on your PSP via remote play. In searching the forums many have confirmed that this does indeed work. Insert your PS1 disc, go into remote play on the PS3 and the game can be played on your PSP.

You can now play all of your favorite PS1 games on your PSP – of course the disc has to be in your PS3 before you leave the house.

This is a big step forward for PSP gaming, but is it a step forward for Sony? It certainly is on the technical side, but buying PS1 games off the Playstation Store to play on your PSP may now seem pointless.

However, most people buy the games if they no longer own them, or if they want to play them upscaled on their PS3. Thus, it does feel like a natural and exciting progression.

*Update* Here’s a video of FFVII being played on the PSP to show the new functionality off:

Source: Playstation Forums