The HTC Dream smartphone with Android operating system will be available for $200 with a two-year contract, sources confirm.

Although the rumors were already out on this one, it has been confirmed that the HTC Dream smartphone, featuring Google’s Android operating system, will be available from T-Mobile for $200 with a two-year contract. According to Crunchgear, an insider involved with the development of Android was able to confirm the price, which is in-line with the previous rumors we have heard. Although no specific details were mentioned about the cost of the device without a contract, the inside source did state T-Mobile’s subsidization was not very large.

We heard back in August rumors similar to what we are seeing now, although with added details for the pricing. According to past rumors, the HTC Dream would cost $199.99 with a two-year contract, $249.99 with a one-year contract and without a contract it would cost $399.99. The unofficially confirmed $200 pricing with a two-year contract does seem reasonable, especially considering the iPhone is currently available for $199.

Earlier this week, there was confirmation that T-Mobile would unveil the Android-powered smartphone on September 23 at 10:30am. The HTC Dream will be the first smartphone to feature Google’s new Android operating system and there are many high hopes for the device. According to sources, the HTC Dream will feature 3G, WiFi, Bluetooth, Google’s Streetview, a YouTube player, a Qwerty keypad, camera and downloadable content via the Android Marketplace.