While Twitter has been busy redesigning its website to provide users with a better web-based experience, Facebook is rumored to be secretly planing the next evolution of its 500-million strong social network - an inexpensive mobile phone that seamlessly integrates your social networks with your mobile device and real-life friends.

According to TechCrunch founder and co-editor Michael Arrington, Facebook is "building the software for the phone and working with a third party to actually build the hardware. Which is exactly what Apple and everyone else does, too."

A Facebook PR, however, told rival tech blog Mashable, "The story, which originated in Techcrunch, is not accurate. Facebook is not building a phone. Our approach has always been to make phones and apps more social."

"Our view is that almost all experiences would be better if they were social, so integrating deeply into existing platforms and operating systems is a good way to enable this."

Rather than defusing the rumors, Facebook's statement encouraged bloggers to believe the company is working on a "Facebook layer" for Google's Android operating system.

The layer might provide users with a seamless way to integrate their online connections with the contacts in their phone, say bloggers, and could further enhance the value of Facebook Places (Facebook's geolocation service).

For the moment, Facebook is trying to keep any so-called plans to enter the mobile race on the low-down.

"The bottom line is that whenever we work on a deep integration, people want to call it a 'Facebook Phone' because that's such an attractive soundbite, but building phones is just not what we do," reiterated the company.

Facebook had not responded to queries regarding a Facebook phone or "layer" at the time of publishing.