O2 has slashed £100 off the price of the iPhone in an attempt to drive sales on speculation that the mobile phone from Apple has performed badly in the tough UK market - and a new 3G model is incoming.

The operator has announced a special offer on the 8GB iPhone which can now be purchased for just £169 until the 1 June 2008.

The offer is available from tomorrow (Wednesday 16th) across all O2 iPhone tariffs, which start from £35 a month. The recently introduced 16GB iPhone keeps its £329 price tag.

What might interest many consumers put off by the phone's previous £269 price tag is that the way the iPhone is sold in the UK (bought first, then contract selected via iTunes) means anyone can now pick up the cheaper model during the promotion - without committing to a contract - and unlock it.

Answering the whispers about poor sales figures, O2 says that this special offer is in order to "expand the iPhone's reach, bringing its benefits to an even greater number of customers" and will mean the device is "an unbeatable proposition in the market, helping O2 to further gain market share".

We would imagine that O2, Apple and Carphone Warehouse will offer a money-back deal to those who have purchased the phone at the previous £269 price in the last 30 days, as is Apple's usual policy.

Looking at this move in wider industry terms, T-Mobile in Germany recently reduced the cost of an 8GB iPhone by a whopping 300 euros to as low as 99 euros, dependent on tariff.

These price cuts are fueling speculation, already rife in the blogosphere, that Apple is planning to introduce the next-gen, 3G iPhone 2 as soon as June (when the promo runs out, incidentally) and this is a stock clearing exercise.