Apple Inc.'s (AAPL) widely anticipated music- and video-playing iPhone will allow subscribers to wirelessly stream material from Google Inc.'s (GOOG) popular video-sharing site YouTube, Apple said Wednesday.

YouTube, which has developed a huge audience on desktop computers but is not widely used on cell phones, has begun encoding its videos in a new format to improve quality and save battery life when viewed over wireless devices.

The iPhone will be the first mobile device to use the new format, Apple said. More than 10,000 videos will be available on the iPhone when it hits stores June 29, with more material added each week, it said.

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AT&T Inc. (T) has an exclusive deal to sell iPhones with its wireless subscriptions.

While the phone will not support AT&T's highest-speed cellular data links, Apple said YouTube would work well on the phone's short-range Wi-Fi network connection.

Prior to the development of the new mobile format, Verizon Wireless, a venture of Verizon Communications (VZ) and Vodafone Group Plc, had an exclusive deal to offer a selection of YouTube videos on its phones.

Verizon Wireless spokesman Jeffrey Nelson said YouTube has been one of its most popular mobile video offerings, frequently taking the top two or three viewership slots.

Apple said YouTube also works on its Apple TV home media hub, which acts as a bridge between a television and desktop computer, playing movies and TV shows.