Hackers have struck back against an iPhone software update from Apple that disabled unlocked phones. The iPhone Development Project has developed a method to install third-party apps and use upgraded iPhones on GSM networks other than AT&Ts, The Unofficial Apple Weblog reports.

The latest hack allows users who've already applied the 1.1.1 firmware upgrade to revert to the previous 1.0.2 update, "jailbreak" the device, and update to the 1.1.1 software while leaving the mobile phone functions still operational.

iPhone Atlas has successfully applied the hack, which it warns is not for novice users since it requires a modicum of familiarity with the iPhone's command line interface.

Help is also on hand for those left with expensive paperweights after upgrading to firmware version 1.1.1 on unlocked devices. A commercially available unlocking tool offers a chance to unlock the iPhone and restore it to working order.

The iPhoneSIMFree utility makes use of a TIFF image buffer overflow flaw in Safari to run code on the device, a bug Apple is sure to address in future software upgrades.

iBrick

Apple upgraded the firmware for iPhone to version 1.1.1, a process that disabled unlocked phones and blocked third-party applications. The update followed a warning of the perils of applying unauthorised unlocking programs from Apple days earlier.

As previously reported, the consumer electronics giant faces a class-action lawsuit over this update. Hackers have now worked out ways to undo the technical changes made by this update, something Apple probably expected to happen sooner rather than later.

So the ball is once again back in Apple's court. It will almost undoubtedly release additional firmware upgrades that lock down the device - mobile phone operators who've agreed to hand over sizable percentages of their revenues from iPhone users in exchange for exclusive rights in particular countries will expect nothing less.

However, the smart money is on a softer line on third-party applications. Informed sources reckon Apple will soon start selling authorised applications from its closest development partners, who'll be offered access to software development kits. ®