After the news we've brought you that the 3G iPhone could go on sale for around the £100 mark in the UK, Macworld is reporting that the next-gen device will actually be offered "from free".

The site states, quoting "UK sources", that the standard price for the phone will in fact be £100 on an 18-month contract, but "deeper plans" will include "free upgrades, free phones for high-tariff users and pay-as-you-go deals".

The speculation goes that O2 may offer the iPhone 2 in the UK on a contract-free, pay-as-you-go basis for the same price as the previous model - at £269.

Other rumours include O2 offering the handset free to those that sign up for the most expensive £75 per month contract and existing iPhone customers getting the chance to upgrade for free if they sign up to another 18-month deal.