Technology blogs are buzzing with speculation that Apple with reveal a wide-screen iPod with touch control tonight when Steve Jobs, the company's chief executive, takes the stage in a product launch event that will beamed live around the world.

“Apple will at last unveil a touch-screen iPod with a 3.5-inch display at its media event Wednesday, sources have confirmed,” the ThinkSecret blog said. Two years’ ago Apple sued the same site for allegedly divulging trade secrets.

Other reports suggest the new device will have a massive 120GB of storage in a built in hard drive. An integrated wi-fi connection, which could allow users to download music and video directly to the device – cutting out a computer for the first time – is seen as a possibility. Others have tentatively suggested the new iPod could also be kitted out to pick up internet radio.

Wall Street also fully expects a revamped line of iPods – a move regarded as essential if Apple is to ensure that the now iconic line of music players maintains its dominance of the digital music market. The company has sold more than 100 million of the gadgets since the iPod's debut five years ago.

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David C. Bailey, an analyst with Goldman Sachs analyst, said: “The product announcement is likely to include a full line-up of revamped iPods, with significantly greater functionality at current price points, including the much-anticipated full-screen video iPod.”

Apple, a master at building hype around its new products, is remaining characteristically tight-lipped over what exactly it will reveal at this evening’s event.

Media from all over Europe has been invited to London for the event, which will be beamed from California – where Mr Jobs give his presentation – to the BBC studios in West London.

Mr Bailey believes that a new line of iPods will boost demand for the gadget from Goldman’s present forecast of about 19.8 million units for Apple’s key first quarter – the reporting period that covers Christmas. However, that still suggests that demand for iPods will be flat, at best, compared with the same period last year, when Apple sold about 21 million devices.

In the middle of last year, Apple’s quarter-on-quarter iPod sales dipped for the first time since the player’s debut in 2002, a decline blamed on the group’s failure to release new versions. Although the timing of the launch suggests that Apple is determined not to fall into the same trap again, the company faces other hurdles in replicating its success in the music market – which it dominates – in video.

Think Secret, which first reported that Apple's engineers were working on the iPod's new incarnation in February 2006, earlier reported: “This video iPod ... will feature a display that will occupy the entire front face of the device. Sources who have seen the device report that it features a digital click wheel, one that overlays the touch-sensitive display and appears when a finger touches it and disappears when the finger is removed.”

It emerged last week that NBC Universal had decided not to renew a deal under which its programmes were sold on iTunes, Apple’s online media store.

It is understood that NBC had demanded more control over the pricing of its content but was rebuffed. NBC shows, which include Heroes, had accounted for about 40 per cent of television downloads on iTunes.

The news came only hours after Apple’s launch of the TV download site in the UK – an event blighted by complaints from British consumers that they were being charged about twice as much as their American peers per episode. Apple also faces competition from rival download and “catch-up” online services from broadcasters including the BBC and Channel 4.

The pack of iTunes’ rivals in music soon will include Amazon, the largest online retailer, which is expected to launch a download service this month.

IPod sales accounted for 29 per cent of Apple's $5.4 billion in revenue in its last reported quarter.

Shares in Apple have surged 13.5 per cent over the past week in the wake of the announcement of tonight's event. The company was also boostedby a report from market research firm iSuppli saying the iPhone was the best-selling smartphone in the United States in July.

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