Google is thought to be set to trial an online virtual universe based on its popular satellite imagery software that would rival Second Life.

Arizona State University students are to be given the opportunity to test a new product "that will be publicly launched later this year".

An announcement by the university, which already has significant ties with Google, said that the project was being developed by a “major internet company” and contained hints that it would include features related to 3D-modelling and video gaming — two possible components of a new virtual world.

Speculation that the new tool would be an immersive virtual world to rival Second Life and created by Google, was fuelled by a blog post this year from Michael Eisenberg, a partner at Benchmark Capital, the technology-focused venture capital group, who said he had heard “through the PhD grapevine ... Google is working on turning Google Earth into a virtual world a la Second Life.”

Google Earth is a virtual model of the globe created using satellite images.

Mr Eisenberg added: “After hearing this, I was struck by the language on the Google Earth website: 'One more step to creating a lifelike 3-D model of the whole planet'.”

Google was not immediately available to comment.

Arizona State University was one of the first universities to use Google Apps, the company’s suite of online applications that rivals Microsoft Office.

Second Life, created by Linden Research, is the best-known of a string of virtual worlds to have emerged in recent years.

Launched in 2003, it boasts some nine million user accounts. Users interact with one another through online personas, dubbed avatars.

Second Life has its own economy and currency, the Linden Dollar, which can be converted into “real” money.

This month First Meta, a Singapore-based start-up, launched what it claims is the first credit card to be used in an online virtual community.

Google already has several building blocks in place that it could use to build a rival to Second Life.

Last year it made available a free 3-D modelling tool called SketchUp, which can be used to build 3-D layers on top of Google Earth.

Google has also built a website called 3-D Warehouse, where users can show off what they have built using SketchUp.

John Hanke, the Google Earth general manager, has already said that the tool was partly inspired by the “metaverse"– a fictional virtual world featured in Snow Crash, the 1992 sci-fi novel by Neal Stephenson.

Linden Labs has cited Stephenson’s metaverse – a kind of 3-D representation of the internet – as an inspiration behind Second Life.

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