Reuters claims to have heard from an inside source that the new model will feature a monochrome E Ink display like existing models, but add front lighting to facilitate reading in the dark.
The report adds that the new Kindle will include a touch-screen and come in both WiFi and 3G models. The inclusion of front lighting is expected to reduce the device's battery life somewhat.
Sources claim that Amazon is also prepping a larger version of its Kindle Fire for launch in North America. The colour tablet arrived in the territory late last year, but is yet to find its way to British stores.
Amazon's Kindle range has been touted as the most significant competitor to the market dominance of the Apple iPad. However, recent figures suggest that the iOS tablet has extended its market share, while Kindle Fire sales are in decline.
Apple is rumoured to be planning to take on the Kindle Fire with a budget-friendly version of its popular tablet, dubbed the iPad Mini.