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T-Mobile will sell the 8GB version of the new model for €1, providing the buyer signs up to a €69 monthly contract.

The 16GB version will come almost as cheap, at €19.95 with an €89 monthly tariff. The price of the handset rises to a €249.95 only if the buyer opts for the cheapest, €29 contract.

With the introduction of the 3G iPhone, which goes on sale on 11 July, Apple has abandoned its revenue sharing model, allowing carriers

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to keep all the income from tariffs in return for subsidising the retail price of the handset. This allows carriers such as T-Mobile to price it as they see fit.

In the UK, O2 has confirmed that the 8GB version of the iPhone 3G will cost £99 on a £30 or £35 monthly tariff, while those prepared to sign up for the £45 or £75 monthly tabs will get the hardware for free.

The 16GB version will cost £159 for the two cheapest tariffs, £59 to those who pay £45 per month and free on the £75 per month option.

Owners of the original iPhone model can upgrade to a new 3G handset for free, providing they agree to a new 18-month minimum term contract.

For details of the O2 tariffs, all of which include unlimited data and free access to more than 10,000 Wi-Fi hotspots, see o2.co.uk/iphone/paymonthly.