Mobile phone operators BT Cellnet and Vodafone went head-to-head today in a price war over their almost-third-generation mobile phones.

In a move towards 3G technology, GPRS (general packet radio service) provides users with always-on data transfer of speeds up to around 56Kbps.

BT Cellnet launched its GPRS service back in April, selling the Motorola Timeport 260 phone at £199.99 with a monthly contract of £7.99, almost twice the price of the same phone made available from today from Vodafone at £99.99.

"Vodafone is just trying to challenge our lead," said a spokesperson at BT Cellnet. "We launched the service first and decided it would not be subsidised as it is against the current backdrop of the market. With the current downturn we are moving away from subsidies."

Vodafone would not confirm whether its service and phones were being sold at a loss until a market foothold was assured.

"Of course we want to challenge BT's lead," said a spokesperson at Vodafone. "BT's pricing policy is not offering the best value for service to its customers. To get some benefits from high-speed access people must be able to afford it."

"We review prices all the time, but have no announcement to make for the time being about the price of the Timeport," said a BT spokesman.

Vodafone's GPRS Timeport handset goes on sale tomorrow costing £99.99 plus £7.49 a month, 50p cheaper than BT.