Apple is working on a cheaper version of the iPhone that is aimed at slowing the advance of competing handsets based on Google Inc.'s Android software, according to people who have been briefed on the plans, Bloomberg said in a report today. 

One version would be cheaper and smaller than the most recent iPhone. Apple is also developing technology that makes it easier to use the iPhone on multiple wireless networks, the report quoted sources as saying.

Apple hopes that the low-cost device would help rival the success of Google Android, which while targeting the high-end smartphone market has also become popular with low-cost devices that offer many of the same functions as smartphones, the report said.

Apple would sell it at a low price mainly because the smartphone will use a processor, display and other components similar to those used in the current model, rather than the pricier, more advanced parts that will be in the next iPhone, the source said. Component prices typically drop over time, according to Bloomberg.

The report also said that Apple initially aimed to unveil the device mid-way through 2011 and very few Apple employees know the 'iPhone mini' exists.