THE mobile phone industry is bracing itself for a virus “epidemic” after the discovery of the first cases of bugs in British handsets.

Analysts fear that the viruses will be able to wipe out memories on mobiles or to inflate telephone bills by making strings of “phantom” calls.

The effect may be similar to that of computer viruses, which cause millions of pounds of damage to systems each year.

Since the first cases emerged last year in America and the Philippines, several cases of “Cabir” viruses have now been found in Britain. These bugs drain a phone’s battery by constantly sending transmissions to nearby handsets.

Analysts believe that hackers may be “field-testing” various viruses to help them to refine those likely to prove most destructive.

D K Matai, executive chairman of mi2g, a digital security company, said: “2005 could be the first year that we see self- propagating mobile phone viruses have an impact on the UK economy.”

Andy Buss, a senior analyst with Canalys, the consultants, added: “It is only a matter of time before we see a virus capable of spreading.”

The Cabir has been the main type of virus detected so far. It spreads between Bluetooth- enabled phones, which are used for communicating with wireless headsets and other gadgets. They can also transmit to nearby phones without any number being dialled.

The bug takes advantage of this by moving between Bluetooth phones as they pass near each other, inviting the user to download it without realising the danger.

Another virus, Skulls, replaces all the symbols on a phone’s screen with a skull and crossbones and transmits itself in disguise as a game or another innocent application.

Smart phones, which in effect function as mini- computers allowing download applications from the internet, are among the most vulnerable. At present, sales of smart phones in Britain are relatively low but within two years there are expected to be 9m users.Contact details, diary dates and even bank account information are often stored on the phones.

“If someone managed to install a malicious programme on your phone, they could get hold of your address book or dial emergency services numbers and flood them so that real emergencies were unable to get through,” said Patrick Runald, senior technical consultant at F-Secure, an anti-virus software company.

“They can also call premium rate numbers which actually cost you money and those numbers would probably be owned by the virus writers.”

Mobile phone companies including Nokia and Virgin Mobile said this weekend that they believed there would be no serious virus outbreak in the near future but they were putting security measures in place.

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