Tesco Mobile has just announced that it will be carrying the iPhone 3G and iPhone 3GS and that it plans to get it out in shops in time for Christmas. We can confirm that Tesco Mobile will be selling iPhones both on contract and on PAYG. Tantalisingly, we've been told that Tesco want to be as competitive as possible and that pricing is currently being negotiated. A release date has not been announced.

Tesco will be selling the iPhone 3G and 3GS in Tesco high street shops and through Tesco Direct online. There's currently a page up on Tesco Direct where you can register your interest for updates and news on the iPhones. There are also plans to greatly expand the number of Tesco Phone Shops in the UK, with over 100 due to be open by the end of the year.

Tesco Mobile is a joint venture with O2 and so the 3G coverage on Tesco Mobile's would be the same as it uses O2's network.