Tom Libretto, vice president of Forum Nokia, said at a recent Evans Data developer conference that the new phone is currently codenamed 'Tube'.
The handset will have Java built in as standard, something the iPhone lacks, and is also likely to include support for the DVB-H mobile TV standard for Europe and mobile video.
Libretto also confirmed that the device will be able to upload photos to the web, indicating either built-in Wi-Fi or HSDPA connectivity.
GPS is also likely to be included, after previous Nokia statements that it wants to build the location technology into all smartphone handsets.
No details have been revealed about release date or prices, but it is likely that Nokia will significantly undercut Apple given the economies of scale possible from Nokia's huge manufacturing capability.
Nokia 'Tube' takes on the iPhone
Nokia has released details of a new touch-screen handset that will go up against Apple's iPhone..
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