TeleNav Software says it's developing turn-by-turn voice navigation software for the iPhone 3G, according to TWICE, The industry newspaper says the move comes despite a clause in Apple's contract with iPhone Developers that prohibits sophisticated navigation features. The iPhone 3G has a built-in GPS, but offers only on-screen maps and text directions.

TeleNav wouldn't say whether it received special permission to produce the software, but industry analyst John Martin told TWICE that Apple executives can always make "special dispensations for any company they choose." Adding complete navigation features to the iPhone could negatively impact sales of conventional GPS devices, which don't offer internet or voice connectivity. According to the report, TeleNav has not said when the new software will be ready, but it is expected to provide voice-driven, turn-by-turn directions and limited traffic and detour information.