announced today that Kindle and Kindle 3G with Special Offers customers will receive AmazonLocal offers on their screensavers when they are not reading.

This turns the e-reader into a handheld daily deals billboard and a competitor to the kinds of daily deals and flash redemptions iPhone and Android phone users can get through Foursquare and Groupon. Amazon has been steadily increasing its competition against daily deals contenders this year. This the latest development is another step in that direction.

AmazonLocal on Kindle with Special Offers is launching in New York City and expanding to all AmazonLocal cities later this year.

The Kindle price was lowered earlier this year to $114 and Kindle 3G fell to $139, after Amazon made the decision to provide special offers through the reading devices. The company says those devices became the best selling devices in the fleet.

Owners of these versions of Kindle can view, purchase, and redeem the deals using only the Kindle.

The Kindle offer allows customers to view their city's AmazonLocal deals and purchase the deal directly from their Kindle, without re-entering account or credit card information.

Customers show this voucher on their Kindle to the local merchant or by bringing in a printed copy.

It would be great if eventually this system would be transferrable to iPhones that run Kindle apps, since holding a Kindle is slightly more awkward than toting around an iPhone. Users can already use Groupon and Foursquare deals on the iPhone and have been flashing redemption codes to cashiers for many months.

AmazonLocal deals on Kindle with Special Offers will be delivered as part of a software update for latest generation Kindles in the coming weeks, the company said.