hello,
ive just completed my second year and have averaged a high first. Is this the right stage to start applying or should it be after the first summester in final year?
Cheers

Usually they require you to apply early Spring time so March/April, which if you're unfortunate is around the time you're completing dissertations and essay/starting exams. My recommendation is, before March, prepare a letter(s) and have an idea about what you want to do. This can be sent off at the beginning of April or early March and should give plenty of time for them to invite you to interviews etc. You may want to let them know when your exams are so that you don't have to turn down an interview.

Andy,

I started writing to people when I was at your stage now (i.e. end of 2nd year). This has 2 advantages: 1) you have plenty of time to develop a relationship with a potential supervisor, which will help you to determine whether you could work with them for 3 or so years. 2) If the don't currently have funding, and you impress them, they will have far more time to try and arrange funding.

I started applying just after I started my third year (around November time) as many application deadlines were around December/January.