The new handset will offer a download speed allegedly twice as fast as the original iPhone and will be available for just £100.

It will also include built-in GPS and iPhone 2.0 software, which includes support for Microsoft Exchange ActiveSync and runs hundreds of third party applications.

As with the original iPhone, the iPhone 3G will be available to O2 customers and will be sold through the Carphone Warehouse and O2.

Announcing the news at Apple's Worldwide Developers Conference last ...