The no-commitment iPhone has arrived: a pay-as-you-go version of Apple’s popular device that frees consumers from long-term contracts with O2.

Analysts predict the UK’s first prepay version of the popular handset, which goes on sale on September 16, will be a top seller in the run-up to Christmas as consumers revolt against long contracts from mobile operators, preferring to pay upfront for the handset and stay in control of their spending.

However, the pay-as-you-go 3G iPhone does not come cheap - £349.99 for the 8-gigabyte version and £399.99 for 16 gigabytes - but does include unlimited data downloads for the first year.

O2 has exclusive rights to Apple’s handset and when the device launched last year there was resentment among some consumers who did not want to be locked into an 18-month contract.

This year Apple allowed O2 to offer the iPhone free on contract for the first time. However, the lowest price is £45 a month over 18 months for the 8 gigabyte handset - equivalent to £810 or alternatively £75 a month for the 16 gigabyte model, setting consumers back £1,350. The pay-as-you-go version is available on any of O2’s prepaid tariffs, from £10 top-up a month, plus the price of the phone.

Ben Wood, head of research at technology analysts CCS Insight, said: “This is huge. I think we’ll see people queuing up outside the stores for it. People are increasingly nervous about locking themselves into long term commitments especially in the light of the current economic downturn.

“The iPhone’s long contract length and expensive monthly contract charges have deterred a vast swathe of UK subscribers from buying one - that has all changed now.”

He predicts it will be one of this year’s “must have” Christmas presents and that people will increasingly buy it as a second phone for browsing the internet.

O2 and Apple are due to announce their strategy for the pay-as-you-go iPhone on Wednesday.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive