Apple today dismissed reports that its iPhones store their users’ locations.

It says media reports last week that they could be used to track their owners’ whereabouts was a misunderstanding of how the phones help determine where they are.

The company said the data file uncovered by researchers and publicised is not a log of a phone’s location, but a list of Wi-Fi hotspots and cell towers nearby. That helps the phone work out its location without having to listen for faint signals from GPS satellites.

The feature, which is included in Apple’s 3G-enabled devices running the fourth generation of its iPhone operating system (iOS4), keeps a record of the phone’s latitude and longitude, along with the time of the visit. The data is stored in a file hidden on the handset. The file is then transferred to a user’s PC or Mac when the device is connected and synched through Apple’s iTunes software.

Apple also said a software bug caused the phones to keep the data longer than intended.

It is the first comprehensive response to claims that iPhones store up to a year’s worth of user location data.