The Guardian's Charles Arthur cites "multiple sources" as saying that an announcement of the iPad Mini is imminent, ahead of a potential November launch.
Competing with Google's Nexus 7 and Amazon's Kindle Fire, the new Apple tablet is thought to have a screen measuring 7.85-inch on the diagonal, compared to 9.7-inches on the main iPad.
Australian technology writer Sony Dickson recently tweeted pictures supposedly showing a fully assembled iPad Mini, indicating a more squared-off device around two thirds of the size of the main iPad, and featuring Apple's new Lightning dock connector.
Previous reports have indicated that the iPad Mini will have smaller side bezels than its bigger brother in order to make it easier to hold in the hand. It is thought that the device will look similar to a large iPod Touch.
Apple is expected to price the iPad Mini competitively against rival products, with analysts suggesting that the entry-level model will cost below $250 (£156), compared to around $200 for compatible Kindle Fire and Nexus 7 models.
The Guardian claims that Apple is not expected to announce a 3G version of the iPad Mini, despite this being a feature that its rivals currently do not offer.
It is thought that the pressure to keep the price low will prompt Apple to offer the product as WiFi-only, along with the desire to keep mobile broadband connectivity exclusive to its premium iPad line.
However, sources told the paper that Apple could be about to refresh the new iPad that was launched in March, including the introduction of a 4G version in the UK on the Everything Everywhere (EE) network.
EE, which will start offering 4G over its 1800MHz network on October 30, has already secured the 4G version of the iPhone 5.
Apple is now expected to announce a refreshed new iPad with the 1800MHz 4G chip and the new connector, presumably coming to Britain before the end of the year.
The sources said that the 4G iPad will also launch on 3's new 4G network, which will use 1800MHz spectrum bought from EE, when it launches next autumn.
Apple was fined earlier in the year by advertising regulators in the UK and Australia after it marketed the new iPad as 4G in those countries when it fact the connectivity was not available.
On Wednesday, Apple is expected to issue invites for a launch event in the US a week later, at which it is expected to officially unveil the iPad Mini and potentially refresh the new iPad line.
Despite the crowded market for small screen tablets, some analysts believe that Apple could sell 10m iPad Mini devices by the end of the year.
> Apple iPad Mini: Rumours roundup