Facebook has announced it is to buy Instagram – the popular photo-sharing smartphone app.

Facebook is paying $1bn (£629m) in cash and stock for the takeover.

Instagram was only launched in October 2010 – initially just for the iPhone before being offered as an Android app last week.

Facebook’s chief executive Mark Zuckerberg has pledged to continue to develop Instagram as a separate brand, allowing it to post to rival networks.

The app is free and allows users to apply 17 filters to the pictures they take – changing the colour balance to give the images a different feel – before they are uploaded.

It has proven hugely popular. The firm says that it has more than 30 million users uploading more than 5 million new pictures every day.

Paul Kedrosky, a tech investor and author of the Infectious Greed blog, told the BBC: “I understand Instagram has 13 employees – so at $77m a head that makes it the most expensive business deal in history that I can think of.”