Telstra and HTC threw a big party last night, launching the country’s first 4G phone: the HTC Velocity.

Powered by Google’s Android 2.3 Gingerbread OS, the new HTC Velocity is a smartphone featuring a 4.5 inch qHD 540×960 screen, GPS, 8 megapixel rear camera with 1080p Full HD video capture, 1.3 megapixel front camera, and 16GB of storage with room to move using the microSD slot.

The real star of the show is the 4G LTE cellular modem under the hood, able to jump onto Australia’s fastest mobile network run by Telstra, the new 4G LTE network.

Telstra yesterday told us that when tethered to a computer, the new Velocity should be able to reach the same high speeds as the Telstra 4G Mobile Broadband dongle released last year, meaning speeds up to 400Mbps down and 10Mbps up are now within reach, as fast as some fixed line connections customers receive at home.

When 4G isn’t available, Telstra says the Velocity will offer the fastest 3G speeds over dual-channel HSPA+, capable of up to 20Mbps downstream.

Android fans may be quick to point out that the Velocity lacks the latest version of Android – Ice Cream Sandwich – but Telstra says an update should be available by the end of February.

It’s also the first of many 4G capable devices from Telstra, with Telstra’s Andrew Volard citing the company will be releasing at least four smartphones and one tablet with 4G access by the middle of the year.

With Telstra the only Australian telco to currently offer 4G network access, the Velocity is only available on the big T, with pricing from $0 on a $79 plan. It’s available now, so if you’re after the fastest mobile speeds in Australia, this is probably the Droid you’re looking for.