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In an unprecedented double move, BT agreed to take six pence off The Sun's price, reducing the cost of the country's biggest-selling daily to 24p. But The Carphone Warehouse, owned by the entrepreneur Charles Dunstone, has gone even further, sponsoring a 12p reduction in the cost of The Daily Mirror to just 20p.

It is understood that the deal with the Sun and BT was signed and sealed when the Daily Mirror responded, approaching Carphone Warehouse for a rival deal.

According to a Trinity Mirror, spokeswoman: "Editor Piers Morgan struck the deal and it's a one-off promotion, which is fully funded with no cost whatsoever to the Daily Mirror. And the reason for the move was to make sure our readers got the very best deal. The package also includes a further advertising deal with Carphone Warehouse."

Neither the tabloids or telecoms giants are strangers to price wars, but today's deals mark the first time they have combined in this way. The Mirror has devoted today's entire page three to promoting the deal, while The Sun has turned over page 10 to highlighting BT's new call-charging structure.

The Carphone Warehouse has already ruffled feathers at BT by signing the actress Maureen Lipman -- for many years the face of BT -- to star in the launch advertising for its talktalk call tariff, which it pledges will save consumers an average of £60 a year compared to their BT phone bills.

Other entrants to the market, including Tesco and Comet, are expected to announce details of their plans shortly.

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