Today, iPhone Dev-Team member @MuscleNerd announced (via Twitter) that the team is working on merging PwnageTool and redsn0w together, and creating a jailbreak tool that will be compatible with iOS 5.

The news came in a tweet that hit the Web earlier today. It read:

We’re adding most popular PwnageTool usage into redsn0w (for Windows+Mac). First up: removing BB update http://twitpic.com/6z6u0y

Jailbreak fans use PwnageTool to create a custom ISPW, in order to preserve their iPhone’s baseband (so that the handset might be unlocked, and used with any carrier). Undoubtedly, it would be much easier for jailbreak fans if the functionality of both apps are combined.

Following the release of iOS 5, the race to develop and release an untethered jailbreak solution for the software update is on. Besides the iPhone Dev-Team, the Chronic Dev Team also has a jailbreak solution in the works. Both solutions should be available soon.

Until then, a tethered jailbreak solution is available for iOS 5. But as it is a tethered solution, users will have to reboot their iOS device while plugged into a computer in order to regain jailbreak functionality if it powers off. In short, it’s not an ideal solution.

We’ll keep you posted on the state of an untethered jailbreak solution for iOS 5. Check back with us for updates.

[via iDownloadBlog]