The next-generation iPhone could have a 4-inch screen in order to better compete with larger Android-based smartphones, it has been claimed.

Digitimes reports that some of Apple's component suppliers have begun readying their production lines for the next-generation iPhone and have been told by Apple that it could have a larger screen.

Current iPhone models have a 3.5-inch display but an increasing number of Android handsets - such as the Acer Iconia, the HTC Incredible S and the Samsung Galaxy S II have 4-inch or larger screens.

Other rumours circulating this month suggest that Apple is working on smaller, cheaper iPhones as well, an avenue which one analyst reckons Apple would be "stupid" not to go down.

Taiwanese website Apple Pro reckons that Apple is in fact evaluating three prototype devices, one of which has a slide-out keyboard. Other reports suggest that the iPhone 5 will support both CDMA and GSM networks.

It is anticipated that an announcement concerning the next-generation iPhone will be made at the WorldWide Developers Conference (WWDC) due to be held in June. It doesn't seem out of the question that there could be more than one new iPhone model announced at the conference.