MobileToday says the £100 reduction will apply to the 8GB device and will take place tomorrow (Wednesday) and will run until June 1st.
This price cut is being seen as another indicator of a soon to come 3G iPhone. Especially since O2's price cut follows T-Mobile's decision to reduce the price of the handset from £315 to £78 in Germany. iPhone stock is reportedly at minimal levels not only in the UK, but in France and the US as well.
The 16GB iPhone will not be included in the offer, and will remain £329.