THE amount we spend on mobile phones has doubled in the past five years, according to figures from Ofcom, the telecoms regulator.

But you can now get a free handset and free calls for 12 months by buying online.

And even if you are tied into a contract, there are lots of other ways to cut your costs.

Online phone retailers are becoming increasingly popular with consumers looking for a new mobile. This is hardly surprising, given that some deals cost nothing for 12 months as long as you don’t exceed your monthly call allowance.

Robert Rawlinson of Mobileshop said: “People are beginning to realise they can save money by buying a handset online, opting for the cheapest monthly tariff and getting the best possible incentive when they take out a new contract.”

Users must pay the monthly fee — generally £30 — upfront and then claim it back from the online retailer under a cashback deal; they also have to cover the cost of any extra call charges.

The retailers can afford to offer such deals because they get a fee from the network operator for each person they sign up.

Industry pundits claim the existence of such offers renders pay-as-you-go deals obsolete. Anthony Ball of Onecompare, a comparison website, said: “With deals like this around there is little point being a pay-as-you-go customer, even if you rarely use your phone.”

Even parents who use pay-as-you-go as a way to limit the amount of calls their children can make may find themselves better off with one of the phone firms’ new fixed tariffs.

Rawlinson said: “There are now contract tariffs, such as U-fix from T-Mobile, with which you can fix how much you will pay every month. These offer a good alternative to pay-as-you-go.”

However, the cheapest tariffs are available only with certain, less high-tech handsets. And heavy users may be better off paying a monthly charge.

The same is true of people who use their phones abroad, because phone companies charge hugely inflated rates on both making and receiving calls overseas.

Someone on O2’s standard monthly tariff, for example, would pay £1.37 a minute to call Britain from America and £1.29 to receive calls from home, compared with up to 35p a minute to call another network here, said Ofcom.

And 3 customers on the network’s pay-as-you-go plan would pay £1 a minute to call Britain or a local number while travelling in Ireland, and 50p each time they answered the phone, compared with 20p to call another network here.

The European Commission is hoping to introduce regulations forcing companies to limit their charges to the same level as domestic calls to other networks at home in the second half of 2007. Until then, however, there are a number of steps you can take.

First, divert all calls to your mailbox before setting off or ask your friends and family to text you rather than calling while you are away. Then check which is the cheapest network in the country you are visiting by visiting the useful, if somewhat hidden-away, EC website — http://europa.eu.int/information_society/activities/roaming/index_en.htm — which includes information on rates.

The network your phone automatically finds when you reach your destination may not be the cheapest, but you can change this using the select-network function on your handset.

Ofcom advises pre-pay users to switch to a contract deal to get cheaper overseas rates. Its other tips include trying to avoid accessing your voicemail until your return, only making calls at weekends or after 7pm, and using texts instead of calling where possible.

Some operators have also launched new tariffs specifically for people who regularly use their phones overseas, so it is worth checking these.

But perhaps the best way to save money on overseas mobile usage is to buy a different Sim card for when you are travelling.

People who regularly visit a particular country can save more than 70% on their call charges by buying a local Sim card, while people who travel to a variety of destinations can save a similar amount with an international card. The cards cost from about £13 at online retailers such as oneroam.co.uk, gosim.com, 0044.co.uk and uk2abroad.co.uk.

Another way to cut your mobile costs is to avoid taking out stand-alone mobile insurance, which is often expensive and riddled with exclusions.

Carphone Warehouse, for example, charges up to £152 a year to cover a contract mobile on its Lifeline Complete plan, and you pay the first £29.50 of any claim, while Vodafone, O2 and Orange generally refuse to pay if a phone is unusable due to water damage.

Stand-alone insurance is often unnecessary because most travel insurance and personal-possessions policies, as well as home-contents policies with all-risks clauses, cover loss or damage to your mobile phone.

Consumer groups therefore advise adding personal possessions cover to your contents policy instead.