Apple today announced that iPhone users will be able to enjoy YouTube clips on their iPhones.

This announcement ends immense speculation about what the mystery twelfth application on the iPhone's home screen could have been, but if you look to the iPhone picture on the right, second row down, left hand side, a YouTube button has appeared in the latest iPhone gallery shots.

A new Apple-designed app on iPhone will wirelessly stream YouTube’s content to iPhone over Wi-Fi or EDGE networks and play it on the iPhone’s 3.5-inch display.

YouTube has begun encoding their videos in the H.264 format, and iPhone will be the first mobile device to use the H.264-encoded videos which should help save battery life and improve quality.

Over 10,000 videos will be available at launch and YouTube will be adding more each week until their whole catalog of videos is available in the H.264 format this autumn.

"iPhone delivers the best YouTube mobile experience by far", said Steve Jobs, Apple’s CEO. "Now users can enjoy YouTube wherever they are—on their iPhone, on their Mac or on a widescreen TV in their living room with Apple TV."

Further to Steve Jobs' previous announcement that it would be coming soon, Apple also announced that YouTube is now live on Apple TV.

Users can download the free software update using Apple TV’s built-in software update feature. YouTube members will be able to log in to their YouTube accounts on Apple TV to view and save their favourite videos.