Sources told The Verge that the update, dubbed Apollo Plus in reference to the 'Apollo' codename for Windows Phone 8, won't be the next major version of the software, but more of an incremental improvement.
Meanwhile, the Windows Phone 7.8 update for legacy Windows Phone handsets is expected to roll out this week.
With Apollo Plus, Microsoft is said to be preparing a WiFi fix that will allow connections to remain always on, as well as bring some audio improvements to handsets running the OS.
The update will also add virtual private networking (VPN) support to Windows Phone, enabling corporate users to connect their device securely to work communications systems, according to the sources.
Over-the-air updates will be tested with Apollo Plus, meaning there is no need to plug a device into a computer to get the software upgrade as with previous generations of the operating system.
Microsoft is said to have 'run out of time' on launching an Apple-style Notification Centre when Windows Phone 8 rolled out earlier in the month, but the company is expected to push that along with other planned features that didn't make it in the upcoming update.
It is understood that Microsoft will announce Apollo Plus at Mobile World Congress in February next year.
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Meanwhile, Microsoft has said that it will "soon" reveal more details on the launch date for Windows Phone 7.8, the new software that will come to certain legacy Windows Phone handsets instead of the full Windows Phone 8.
Sources have told Wmpoweruser that the update will actually arrive tomorrow (November 28), bringing a range of new features to pre-Windows Phone 8 devices, including a refreshed 'start' screen with resizable live tiles and new theme colours.
Windows Phone 7.8 also introduces a new personalised lock screen linked to apps, Bluetooth file sharing and security upgrades to the Internet Explorer web browser, among other features.
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