Famed reverse engineer Jon Lech Johansen claims to have discovered a way to "activate" an iPhone without signing up for a contract with AT&T. The hack allows users to use the iPod and Wi-Fi capabilities of the devices, but doesn't allow use of its phone features.

DVD Jon - who's been something of a thorn in Apple's side for some time, most notably when he decoded the encryption that locks down iTunes-purchased music - said his latest hack allows potential iPhone purchasers to use the device as a sort of iPod/personal organiser on steroids without entering into a two year contract with AT&T.

He's published a software package called Phone Activation Server v1.0 that automates the hack, while still requiring a fair bit of knowledge about manipulating host files and the like to pull off.

More straightforwardly - though rather less elegantly - users interested in using the device only as a souped-up iPod can activate the iPhone using a prepaid plan with AT&T, which they then cancel.

Since the much-hyped release of the iPhone last week, security researchers and white hat hackers have been hard at work attempting to spot security vulnerabilities in Apple's device. Early probing unearthed ways to subvert the device's browser and uncover passwords hiding in Apple software.

Hackers claim to have discovered a technique for discovering that root and mobile account passwords embedded in the firmware on iPhone handsets. The data came from analysing an Apple iPhone restore image file. Since the iPhone has no console or terminal access, logging into either the "root" or "mobile" account isn't (immediately, at least) possible. The passwords might simply be left over from development work or are a red herring planted deliberately by Apple to put hackers off the scent.