LONDON, UK: Deutsche Telekom's T-Mobile UK is launching the world's first pay-as-you-go Google Android phone, strengthening the Internet giant's hand in the hotly contested smartphone arena.

T-Mobile, which has deals to sell Apple's rival iPhone in Germany and several other countries but not the UK, said on Thursday it would start selling the new Android phone in October for 179.99 pounds ($293.60).

That compares with 342.50 pounds for the cheapest pay-as-you-go iPhone or 538.30 pounds for the latest model in Britain, where it is sold exclusively by Telefonica's O2 and retail chain Carphone Warehouse.

Smartphones -- phones with computer-like capabilities such as Web access and email -- are the only section of the mobile phone market expected to grow this year. Sales of handsets in general are expected to fall about 10 percent globally.

T-Mobile UK is the second-smallest of Britain's five mobile operators, and is considered a ripe target for acquisition in an overcrowded market, although it has recently appointed a new chief to restructure the struggling business.

The company said the launch of the "T-Mobile Pulse" was a major step in bringing Android phones, previously aimed at the high end of the market, to a wider range of customers.

The phone will come pre-installed with popular Google services and also has built-in GPS navigation, a large, 3.5-inch (8.9 cm) screen, trackball, 3.2 megapixel camera and 2 gigabytes of memory.

It is being manufactured in partnership with China's Huawei and is powered by a Qualcomm chipset.