(Reuters) - Apple Inc. denied that its iPhones are tracking the location of users, responding to criticism that it was using data to help tap the market for location-based services.

"Apple is not tracking the location of your iPhone," the company said in a statement on Wednesday. "Apple has never done so and has no plans to ever do so."

In response to worries about location tracking, Apple said it would release a new software update that would cut the size of a wireless hotspot location database stored on its popular iPhones, and stop backing up that information. The software will be released in the next few weeks, it said.

While the iPhone is not logging locations, it does keep "a database of Wi-Fi hotspots and cell towers around your current locations... to help your iPhone rapidly and accurately calculate its location when requested," the company said.

Some of that location information is stored on each iPhone, and is backed up in iTunes. Researchers can also see that information.

But it said the data that researchers see is anonymous and shows only the location of Wi-Fi hotspots and cell towers surrounding the iPhone's location. It said those geographic points could be more than 100 miles away from the actual location of the iPhone.

Apple and Google Inc, fierce competitors in mobile computing, have faced sharp criticism since news reports emerged that their phones track the locations of users.

Separately, Apple also said a white version of the iPhone 4 will be available on Thursday after failing to deliver the model when it was introduced last year.

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