Apple has revealed a budget, miniature digital music player, the latest addition to its iconic iPod range, which it will retail in the UK for £109.

The 1GB iPod nano is thinner than a pencil and will hold up to 240 songs or 15,000 photos.

It is £30 cheaper than the previously cheapest iPod nano, a move that could signal a renewed move by Apple, a company that has traditionally been reluctant to compete on price, to renew its focus on the lower end of the market.

Apple also announced a price cut for its cheapest iPod. The 512MB shuffle model will now cost £49, down from £69.

The iPod has become the world’s most popular digital music player, with more than 40 million sold.

The iPod nano drew acclaim from reviewers when it was unveiled last year, with one saying, "It’s so teensy and glossy and perfect, you want to put it in your mouth like a hard candy."

However, within days a flaw in the construction of the music player’s screen resulted in a wave of bad publicity, forcing Apple to replace them.

Last month, Apple revealed record figures for the final quarter of 2005, achieving sales of $5.7 billion in the run up to Christmas.

Apple sold 14 million iPods during the period – compared with 4.5 million during the same period a year earlier. Of the 42 million iPods sold since the product’s launch, 32 million were sold last year. Apple said it is now selling 100 iPods every minute.

iTunes, Apple’s online music store, is approaching its 1 billionth download. The site is selling around 3 million songs a day.

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