O2 has announced 'pay-as-you-go' prices for Apple's iPhone in the UK.

The handset, which from September 16 will be available without a contract from O2, Apple and the Carphone Warehouse, will be priced at £349.99 for the 8GB model and £399.99 for the 16GB version. The price includes the use of Wi-Fi and web access for 12 months after the phone has been activated. After this period, users will have to sign up for a £10 monthly subscription.

Apple has also warned that the iPhone's 'visual voicemail' and 'call-merging' functions will not be available on the non-contract models.

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