Orange has slashed the price of its entry-level mobile broadband package to just £4.89 per month.

The 18-month contract, which includes a dongle, offers a 500MB monthly download limit. However, Orange has also revealed the charge for exceeding the data limit will be capped at £40 in a bid to comply with new EU roaming laws regarding 'bill shocks'.

The move could prove very popular with customers after comparison website revealed last week that a quarter of Brits could face extortionate bills because they aren't aware of the download limit on their mobile broadband package.

Jo Shapland, senior proposition manager for Orange's mobile broadband product, told The Times: "There is a need for a light usage product out there and we want to reward our users by offering them the cheapest pay monthly product on the market".

"We have to reduce the bill-shock element especially for a lower price point product. That reassurance will stimulate more usage," she added.

Orange has also unveiled a mobile broadband package that offers free unlimited data usage between midnight and 9am every day. The deal costs £13 per month and includes a data cap of 1GB, which applies between 9am and midnight.

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See also: Govt promises fast mobile broadband for all