The iPhone Dev Team has released the UltraSn0w 1.0-1 tool designed to allow users to jailbreak iPhone 4, 3GS and 3G handsets running on iOS 4.0.1.
According to the iPhone Dev Team blog, the jail breaking tool is compatible with iPhone 4 baseband 01.59 and 3G/3GS basebands 04.26.08, 05.11.07, 05.12.01 and 05.13.04.
The tool can be downloaded from Cydia or can be found at repo666.ultrasn0w.com.
The iPhone Dev Team has also released a how-to video that explains how to jailbreak an iPhone with the tool, step-by-step.
The new jail breaking tool will allow iPhone users to unlock their devices so that they can run unsupported third party applications and be used on other carriers' networks.
The release follows that of the JailbreakMe application, which allows users to unlock their devices by visiting a website from their iPhone's web browser.
A recent landmark ruling in the US has stated that jailbreaking is not illegal.
Apple had said that jailbreaking its devices was illegal, claiming that the concept was not in-line with American copyright laws, and still insists that jailbreaking one of its devices will invalidate its warranty.