In the first deal of its kind in the UK, Tiny Computers is offering to give a PC to anyone signing a one-year contract with the new telecoms company Tiny Telecom, provided they agree to make a minimum of £25 calls a month.

The deal mirrors moves in the US which have seen PC prices slashed. On Thursday, Microsoft announced it was offering free PCs to US customers who signed up for three years of its Internet service.

Analysts believe the move by Tiny could trigger a similar round of offers in the UK.

Several options

Calls through Tiny Telecom will be routed via the Cable and Wireless network and charged at standard rates.

They can be either voice calls or PC-based calls to Tiny's free subscription Internet service.

Tiny, which sold 256,000 PCs in the UK last year and has 107 high street stores, is aiming the offer mainly at consumers looking for PCs as a way on to the Internet.

According to reports in a range of UK newspapers Tiny's customers will be offered the option of a free PC, although it will not include a screen and will have to be plugged into the television set.

A higher specification PC, with monitor, would be available for an additional £7.89 a month over four years.