The Guardian reports that Apple is currently working on a new audio format that could allow the company to offer "high definition" audio via iTunes. The format would also integrate an "adaptive streaming" component that would allow music being accessed from iCloud and iTunes Match by portable devices to be automatically adapted to fit bandwidth or storage constraints.

Apple is working on a new audio file format that will offer "adaptive streaming" to provide high- or low-quality files to users of its iCloud service. [...] The new system would adjust itself to the bandwidth and storage available on the receiving device. It is believed that Apple will use the new file type to upgrade its iTunes Match service, which allows users to re-download music from iCloud to their Apple devices.

According to the report's source, Apple has asked one London music studio to prepare audio files in the new format, which would allow Apple to instantly and automatically improve the quality of iTunes Match content. The source is unclear, however, on whether Apple would transcode the higher-quality files on the fly to match a given bandwidth/hardware setup or if it would simply maintain several versions of the track at different qualities and serve the most appropriate one for a given situation.

Given the timing of Apple's work, the source suggests that the company is likely preparing the new format for a demonstration at its iPad media event rumored for next Wednesday, March 7.

The new report comes less than a month after Neil Young revealed that he had worked with Steve Jobs on a high-definition music format for the iTunes Store but that "not much" had ended up happening with the effort. Apple has also recently begun a significant expansion of its Mastered for iTunes program. The initiative encourages recording professionals to utilize high-quality master recordings of songs and albums as the initial source material for iTunes Store submission, processing them using Apple's guidelines and tools to achieve file compression allowing for the highest-quality sound available.