The co-branded, $199, device, to be released in San Francisco at Google’s I/O conference, is likely to compete with the Kindle Fire, which also retails for $199 in America.
Gartner research suggests the tablet market may grow to nearly 120million units this year.
Amazon uses the Kindle Fire to encourage users to buy books, music and video, while existing Google tablets have tried to challenge the iPad.
An Asus executive told Reuters the new tablet was building on the success of cheaper devices. “It's targeting Amazon. The Kindle is based on Google's platform but with its own service, so Google has to launch its own service, too," said the executive.
Google has its own store for apps called Google Play, but does not have anything like Amazon's service. The new tablet is expected to run Jelly Bean, an update to the Android operating system that is only expected to make minor changes.
Bloomberg earlier reported that Google would launch a tablet at its developer conference this week, taking direct aim at Apple Inc's iPad, citing two people familiar with the matter. One of the sources said the 7-inch tablet would showcase new features of Android.
Price, specifications or launch timetable have not yet been confirmed. Google declined to comment.
Apple's iPad had a 68 per cent share of the market in January-March, according to data from IDC. Amazon had a little over 4 per cent, lagging Samsung Electronics and Lenovo. Microsoft last week introduced its own line of tablet computers, marking a major strategic shift for the software giant as it struggles to compete with Apple and re-invent its aging Windows franchise.
Google has previously worked with hardware manufacturers HTC and Samsung to produce co-branded Android mobile phones under the Nexus brand. This would be its first such tablet device.
Commentators remained sceptical about Google’s chances, however. “When you look at the tablet market, you have iPad - and others,” said Rhoda Alexander, an analyst at industry researcher IHS iSuppli. “Everybody is trying to figure out how to compete against the iPad. And I just see it as just one more experiment going down that road.”
Gartner expects the iPad to remain the global tablet leader until at least 2016, even as it loses some market share. The iPad will account for an estimated 46 per cent of shipments in 2016, down from a projected 61 per cent this year. Android may have 37 per cent by 2016, a gain from 32 per cent. Microsoft, which had zero per cent of the tablet market last year, is expected to capture 12 per cent by 2016.
At last year's conference Google's announcements included Google Music, its streaming music service, the Ice Cream Sandwich update to Android and Chromebooks - Google's range of laptop computers running its Chrome operating system.
However, products announced at Google I/O have not always been hits. The 2009 conference saw the debut of Google Wave, a collaboration tool that the search company eventually closed earlier this year.
A year later the company unveiled Google TV, its apps driven television platform. Google TV has struggled in the US, where the interface has undergone several redesigns. A Sony-branded Google TV set-top box will launch in Britain next month.
