When Amazon announced the Kindle 2 in early February they dropped hints about reading Kindle books on an iPhone, and here’s the reason for the hints: Kindle for iPhone. (iTunes App Store link.)

Once you install this free application, all you have to do is enter your Amazon account’s email address and password and you have access to all your books, because Kindle purchases are automatically backed up at Amazon and can always be downloaded at no charge. But there’s a caveat; this version of the iPhone app doesn’t support subscriptions to newspapers, magazines, blogs, etc. (Which could mean Apple has something else planned in that area.)

To read a previously purchased book on the iPhone, select ‘Archived Items’ and you see a list of all your Kindle books, which can be downloaded to the iPhone. Even if you delete an item from the Kindle or iPhone, it’s always available under ‘Archived Items’ on any registered Kindle-reading device (as long as you can get connected to Amazon’s Whispernet system). The Whispersync feature even keeps track of the furthest page you’ve read in each book, across all your devices.

After registering, your iPhone shows up in the download menu on Amazon pages for Kindle books, so you can buy stuff and have it automatically sent straight to the iPhone if you like.

The Kindle app has an iPhone-style interface, and shows book covers and interior illustrations in color. As with the Kindle, you can set the text size as you read, and you can save bookmarks to specific sections. Paging back and forth is done with iPhone-style finger gestures.

If you have an iPhone, you want this application. It’s great.

At TiDBITS, Glenn Fleishman writes: “Kindle for iPhone is a bit of a game changer.”

Overnight, 240,000 books are suddenly available for the iPhone through a free application’s conduit. This might also signal that Apple has no plans to enter the electronic book reader market - otherwise, why allow Amazon to set up a beachhead?