The handset division of the Finnish company, which is in the final stages of being acquired by Microsoft, will show off the new phone at the Mobile World Congress in Barcelona later this month, the report said on Monday, citing unidentified sources who were familiar with the matter.
According to technology research firm, Strategy Analytics, 79 percent of smartphones shipped worldwide last year ran on Android, 15 percent were iPhones running Apple's iOS and only 4 percent ran Windows Phone software.
Nokia has been rumoured to be developing a budget Android smartphone for some months now, a device that is supposedly being developed under the Project Normandy programme.
Expected to be called Nokia X, the rumoured low-cost Android handset is said to sport a highly customised, or forked version, of Google's Android operating system, such as what Amazon uses for its Kindle Fire range of tablets.
While previous reports claimed the Nokia X smartphone would run a forked version of Android 4.4 KitKat, one of the most recent purported leaks suggested the Finnish manufacturer was using Android 4.1 Jelly Bean.
Stay tuned for more details about Nokia's rumoured budget Android phone ahead of its expected MWC 2014 launch.
Written with inputs from Reuters