Britains largest supermarket Tesco announced today that it will begin selling the iPhone through an agreement with O2, the supermarket hopes to have pay-as-you-go and contract models available before Christmas 2009.

Tesco is not currently offering any pricing or tariff details. But did describe the pricing as “competitive”.

Tesco Mobile which is a joint venture with O2 will be offering the iPhone 3G and iPhone 3GS in Tesco Phone Shops and online through Tesco Direct in the UK.