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."
Tesco started selling the iPhone in the UK on Monday 14 December 2009, using O2's mobile network.