Device is expected to be released mid-year.
Apple has reportedly started testing a new iPhone, as well as the next version of its iOS software, reports suggest.
The news website The Next Web reported that Apple has been testing hardware relating to a new 'iPhone6.1,' identifier, powered by a device running iOS 7. The report said that Apple expects to release the device in the middle of 2013.
The Next Web said: "From the developer logs that we have seen, the app requests originate from an IP address on Apple's Cupertino campus, suggesting that members of Apple's software development and app teams are compatibility testing some of the more popular or well-known applications already on the App Store."
"Although OS and device data can be faked, the unique IP footprint leading back to Apple's Cupertino campus leads us to believe this is not one of those attempts," said the website.
In June last year, Apple had unveiled its mobile operating system, iOS 6 introducing over 200 new features including its own mapping service and improved search capabilities of its Siri voice assistant.
IOS 6 also features redesigned iTunes Store, App Store, and iBookstore apps which facilitates navigation.
Recently, several reports suggested that Apple was in discussions with Foursquare Labs to incorporate its location-based data into its iOS mapping application.