Tesco Mobile customers can now purchase the iPhone 3G 8GB for £100, iPhone 3GS 16GB for £200 or iPhone 3GS 32GB for £275 with a new 12-month contract, paying £35 per month.
The plan includes unlimited texts, data and Wi-Fi, and 750 free voice minutes each month.
New Tesco Mobile iPhone customers can also choose to get a free iPhone 3GS 16GB, with unlimited calls, texts, data and WiFi on a 24-month contract for £45 per month.
"Tesco Mobile's iPhone tariffs have been very popular," said Lance Batchelor from Tesco Mobile.
"We've now made them even better, with a lower upfront cost for iPhone and a new 12-month contract."
Apple's iPhone is available at Tesco Phone Shops and or via its dedicated website.
Tesco started selling the iPhone in the UK on Monday 14 December 2009, using O2's mobile network.
See also: Tesco to offer Apple iPhone