Called Android, Google said its software system would make the Internet work as smoothly on mobile phones as it does on computers. In a departure from industry norms, Google will allowing independent designers to tinker with Android.

Google-based phones are likely to hit the market in the latter half of next year, when Deutsche Telekom''''s T-Mobile says it will start selling Google software-based phones. The world''''s largest mobile carrier China Mobile, Japan''''s NTT DoCoMo and KDDI, as well as European and Latin American operator Telefonica also said they were working with handset makers to develop Google-based phones.

Google said it has forged an alliance with 33 companies, including phone makers Motorola, Samsung, and High Tech Computer. "We''''re hoping thousands of different mobile phones will be powered by Android," Google CEO Eric Schmidt told the media.

In another departure from convention, Google is offering the software for free. The company hopes operators will pass along something like 10 per cent savings to customers through phone subsidies or lower monthly fees. The company is looking to strike revenue-sharing deals with carriers who agree to lower monthly data charges, expanding the potential audience for use of the Web on phones.

Google also said it is is in no rush to see operators change the way they charge for their services, but new ways of making money - like advertising-subsidised offerings - would soon be possible.

The company aims to expand the range of web services it now offers for computer browsers to the far-larger mobile phone market, in which hundreds of conflicting handset designs and software standards compete. Google''''s system is up against mobile operating systems backed by Nokia, Microsoft and Apple''''s iPhone.

Network operators tightly control the software and services customers can use on their phones, getting a hefty cut of the resulting revenue from third parties. But Google''''s Android -based on Linux open source technology - does not differentiate between a phone''''s pre-installed core functions and any independently created applications added by customers later.

Research firm Strategy Analytics estimates that Android will be installed in 2 per cent of smartphones in 2008. Smartphones as a whole constitute only 6 per cent of the total US phone market.

The analyst verdict is that Android is a set of tools that has to be innovated on, if the Google success story on computers is to be made possible on mobile phones, allowing millions of programmers to mix and match products with other software.

Online auction leader eBay Inc said it hoped to make it easier to buy or sell goods and services on such phones. Android also works offline, allowing air travellers to check address books in mid-flight.

Google has long been rumoured to be working on a new free or low-cost ad-supported phone of its own, dubbed as the ''''Gphone''''. But the company said it had no immediate plans to develop its own devices.