I googled for this problem many times and ended up with no results, so I decided to post it here.
Can we use a GSM Dongle (usb dongle) instead of a GSM shield (like SIM900 module) to send and receive SMS in Arduino? If so how it is possible?
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Not directly. The standard Arduino Uno doesn't have the hardware/software necessary to act as a USB host, which means it can't talk directly to other USB devices.
You might be able to get it work via a USB Host Shield. I don't know how compatible that is with GSM dongles though because I assume you can't install drivers on it. Additionally, if you're using a shield anyway, you might as well use a GSM shield.
If you're able to get an alternative board then another possibility might be the Arduino Yún. It has a USB host built-in which is operated by the Linux part of the board. I don't know for certain that it would handle a GSM dongle, but it may be worth looking into.
YES you can with an Arduino Yùn The dongle will have to be handled by the linux part of the board and doing so will leave you all the I/O pin free for your project.
You might want to check out this for the howto:
You can search for, or create your own 'breakout' board.
You could actually get an sim900 chip running on a breadboard. I think this might be most usefull to you: http://img01.cp.aliimg.com/imgextra/i2/87365807/T267qSXa4aXXXXXXXX_!!87365807.jpg
Though this one is quite expensive. (As it doesn't even has a SIM900 on it?) There is no reason the SIM900 can't work withouth arduino board.. But the reason it's used with an 'shield' is because it's easier to connect and enables to draw power from the arduino. (You do need a good supply for the sim900, it can have peak-power levels, which might reset your arduino)
So yes, you could make your own dongle based on a SIM900! Which works great for Embedded/Realtime (UNO).
But also, you might want to use a board that has Linux (But bear in mind that this is 'completely' different from the UNO. Check the other answer in this case.
Edited, Chris explained me you simply can't use an usb device withouth a USB host with USB driving software.
Usually, these usb dongles consist of two parts: the usb part, and the gsm part. If you can find the spec on the gsm chip, you might be able to bypass the usb part.
Unfortunately, these circuits are usually surface mount - tiny pins, tiny traces, and lots of them. Soldering them will probably be tricky.
also im in the try of that.YOU HAVE TO USE USB TO SERIAL CONVERTOR CIRCUIT TO ACCESS ARDUINO BY UART (mosi....... miso) connections .and the software in the dongle is the problem here.the difference between the gsm shield and the dongle is .........the SOFTWARE FIREWALL you have to flash the dongle by your own risk.........try this