Reports that Apple is working on a cheaper iPhone have been given a massive boost after it emerged that Asian suppliers have already begun manufacturing a lower-priced version of the iPhone 4, a device that will feature a smaller 8GB flash drive, reports Reuters.

If true, the report would reinforce rumours that Apple is to simultaneously release two iPhone devices, the iPhone 4S and the iPhone 5.

The iPhone 4S would possibly see Apple make a dedicated push into the mid-range smartphone market, attempting to appeal to consumers that have been tempted by the huge increase in low to mid-range handsets running Google’s Android operating system.

A cheaper iPhone would also suggest that Apple would push its new iCloud service, a web-based platform that stores music, documents and settings, reducing the need for on-board storage on the device itself.

Apple is expected to launch the iPhone in October, suggesting the iPhone 4S would launch at the same time. Sources close to the Foxconn and Pegatron have said production of the two devices will reach 45 million units.