The network confirmed on Twitter that its users are "unable to access data services" and 4G coverage.
The issue is also impacting customers of MVNOs that piggyback on O2's infrastructure, like GiffGaff, Tesco Mobile, and Lyca Mobile.
The problems seem to have started at around 8:00 AM this morning and are ongoing at the time this article was posted.
A tweet sent out this morning adds: "One of our 3rd party suppliers has identified a software issue in their system". Our priority is to restore full data services on the network by tomorrow morning. "We apologise for any inconvenience".
O2 said that services are slowly being restored and the company would continue to work on the problem throughout the night.
Thousands of customers are believed to have been affected in the data blackout, which is also affecting customers of other mobile providers who use O2's service. "We fully appreciate it's been a poor experience and we are really sorry".
uSwitch mobile phone expert Ernest Doku has advised users how to cope without data, saying: "O2 users affected by this mobile data outage will understandably be concerned and frustrated".
O2 said its technical teams are working with its supplier's teams to fix the problem. This means that the number of impacted customers is, in reality, likely to be much higher than 25 million.
The first issues were reported at around 5.30am on Thursday. Our technical teams are investigating.
"Updates will be shared here as soon they are available". Work is now ongoing to fix the fault and customers are being encouraged to use wi-fi where possible.