Apple has given the green light to Spotify’s iPhone application, despite the fact that it could be regarded as a competitor to Apple’s own iTunes.

The Spotify application will allows users to listen to streamed music on their iPhone or iPod touch. It will also temporarily store music from user’s playlists on the device for use when there is no internet connection.

Apple has a policy of rejecting applications that compete with features or applications that come pre-installed on the iPhone. However, perhaps mindful of the public relations furore a rejection would create, Apple has decided to allow the Spotify application to pass.

The Spotify app itself will be free, although users will need a $16-per-month premium subscription to the service to access music on their iPhone.

The company, which submitted the application for approval in July, says it’s delighted by the outcome. “We’re not surprised but we’re thrilled,” founder Daniel Ek told. “We had a great dialogue with Apple from day one.”

Apple may now be forced to accept similar applications from rivals such as RealNetworks, which has submitted an app based on its Rhapsody streaming service for approval.

Spotify is also expected to pop up on rival mobile platforms. An Android version is already in the works, and the company has hinted that it may produce software for Windows Mobile phones.

ANI