Hackers intent on unlocking Apple's iPhone so that it can be used outside the US claim to have made a breakthrough.

The bad news – for Apple fans not patient enough to wait until iPhone's official release in their countries – is that, when unlocked, the device only works as an internet browser and iPod, not a phone.

'DVD Jon', one of many hackers to have been scouring iPhone's system for vulnerabilities since its release last Friday, has published a software package which "activates" the hack, which would in theory enable a Europe-based owner to browse the internet and upload songs.

Officially, the iPhone only works for people signed up to packages on Apple's US network partner, AT&T.

According to many reports, the hack requires a significant amount of computer knowledge. Wired.com suggested that prospective hackers would need "a Windows machine with the MS.NET framework and a bit of hex editing."

One US-based eBay seller said that at least six iPhones have been bought by UK customers in the past week.

DVD Jon, who is best known for breaking the digital rights management (DRM) protection on tracks bought from iTunes, said that there was a second, easier, way to unlock the iPhone, but it relied on borrowing the SIM card from a legitimately "activated" iPhone, and the effect of this could be to disable the latter.

A post on DVD Jon's blog, which is called 'So sue me', read: "the only possible issue is that it might disable the original phone? But I have nothing to base this on, this is more or less a warning. I did not have access to the original phone after the process was done."

In a separate development, hackers claimed to have discovered six-letter passwords to the iPhone, one being the device's "root password", but it was not immediately clear what their use was.

"Some have suggested that the password file was left over from early development work, or was intentionally included to throw hackers off the scent," a report on builderau.com, an Australian web development site, said.

iPhones were still being advertised on eBay for as much as $1,000 today, suggesting that there is an appetite for the device among non US-based buyers.

A blog called unlockuriphone.com offers to unlock iPhones for "a small fee" as soon as it has cracked the code, and asks owners to send their iPhone's International Mobile Equipment Identity (IMEI) number, a number which identifies each handset individually.

Paul Vlissidis, technical director with NCC, a security firm, said: "With a release as high profile as the iPhone, there's enormous kudos for the successful hacker, not to mention a potential income stream in handing over the code."

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