Google has developed a prototype mobile phone that could be made freely available to users who agree to receiving advertisements as part of a bundled service, according to reports.

The search specialist is reportedly showing the prototype to phone manufacturers and telecoms firms, with a view to the device hitting shelves within the year.

This is not the first set of rumours to surface about a Google-branded phone. The search giant reportedly held talks with operator Orange late last year about partnering to offer a mobile device that enables web browsing. However, Google is not expected to develop the device itself but instead looks likely to rely on a third-party handset manufacturer. Taiwanese firm HTC is rumoured to be the most likely candidate for supplying the hardware.

At an informal press event at its London Victoria offices on Wednesday, engineers were tightlipped on the rumours about a Google phone. But they passionately discussed how well the firms' applications, including Google maps and Gmail, worked on mobile platforms such as the BlackBerry.

Despite today’s flurry of new reports, Google declined to confirm any concrete details of a forthcoming mobile device.

"What our users and partners are telling us is that they want Google search and Google applications on mobile, and we are working hard every day to deliver that,” a spokeswoman said. “We're partnering with carriers, manufacturers, and content providers around the world to bring Google search and Google applications to mobile users everywhere."

If Google does go ahead with a branded mobile device, naming it could prove a challenge – or expensive. US-based carrier GlobalPhone already owns the gphone.com domain name, while googlephone.com is currently used by a site offering mobile phone downloads.

Apple faced similar difficulties with the launch of its iPhone earlier this year, as that name was already trademarked by Cisco acquisition Infogear. It reportedly paid at least $1m for the iphone.com domain last month, which now directs traffic to its apple.com/iphone web site.