Apple has unveiled a new water resistant iPhone featuring a higher spec camera, a faster processor and brighter display, in a bid to boost flagging sales of the mobile device.

But the phone no longer has a 3.5mm headphone socket, with audio now set to be provided via the lightning port or wirelessly via Bluetooth.

The company said it had decided to get rid of the old technology to make space for new features, and also because it has a vision about how audio should work on mobile devices.

An adapter will be provided in the box to enable "old" headphones to be used with the lightning port.

Apple also unveiled new wireless "Airpods" - Bluetooth enabled ear buds which have a five hour battery life and come with a charging case that provides up to 24 hours of charge.

"We believe in a wireless future," said Apple's lead designer, Jonny Ive.

iPhone 7 is water and dust resistant, with an IP67 rating. It also features a reengineered home button which is force sensitive and provides vibrating taptic feedback.

The phone's new main camera has a 12MP sensor, a wider aperture, six element lens and is 60 per cent faster.

The larger iPhone 7 Plus will come with a dual lens system - two 12MP sensors, one with wide angle and the other with a 56mm telephoto lens, to provide digital SLR style zoom features.

"This is the best camera ever made in any smartphone," claimed Apple's Phil Schiller.

The phone also comes with a new faster and more powerful processor, called the A10 Fusion, which is 120 times more faster than the original iPhone.

A new Retina HD display on the device also provides a 25% increase in brightness, the company claimed.

It has improved battery life too, Apple says, with the iPhone 7 providing up to two hours more power a day than the iPhone 6S.

The iPhone 7 starts at $649 for the 32GB version, with 128GB and 256GB versions also available, while the iPhone 7 Plus starts at $769.

Pre-orders will open on Friday, with the new devices shipping from 16 September in Ireland.

It will be available in a new high gloss jet black colour, as well as black, gold, silver and rose gold.

The company also took the wrapper off a new Apple Watch, clearly repositioned to appeal to the fitness and health market.

The Watch Series 2 will be waterproof up to 50 metres, with a re-engineered speaker which ejects water and will learn about stroke efficiency over time, the company says.

The new device also has a 50%faster dual core processor, a new graphics processor with double the performance of the previous model and a revamped display which is twice as bright as the first Watch.

It also has built in GPS, which will be an attractive addition to runners and hikers.

The company has also partnered with Nike to produce a special edition Watch aimed at runners.

However, Apple did not mention anything about an upgrade to the battery, or reveal how many of the wearable devices it has sold since launch. 

But it did say that during the eight months it was on sale in 2015, it rose to become the second most popular watch brand in the world, behind Rolex.

Pricing of the new Series 2 Watch will begin at $369, with pre-orders starting on Friday, and the device now going on sale the following week.

Apple CEO Tim Cook also gave an update on Apple Music, saying it now has 17 million subscribers.

He told the audience that more than 140 billion apps have now been downloaded from the App Store. 

The company also revealed that the iconic game character, Mario, is coming to the iPhone.