Google is planning a shake-up of the smartphone market by releasing its own handset, a move that would tighten its grip on mobile software and see it compete directly with the iPhone.

The technology giant is in discussions with mobile operators about releasing a Google-branded phone that will extend the company’s move into hardware, sources familiar with the discussions told The Telegraph.

Google already develops the Android operating system that runs on four in five smartphones sold around the world, and endorses a range of phones made by partners such as LG and Huawei under the Google Nexus brand. But unlike Apple, it leaves manufacturing to other companies such as Samsung, with the company concentrating on developing the free software that runs on its phones.