Two versions of Google phone were planned, Reuters reported, one to be subsidized through T-Mobile by contract and one unlocked version sold through Google’s website.

The new Android based and Google branded phone could be launched as early as January 5, 2010.

The phone will run Android 2.1… which features animated home screens, 3D elements in the application tray, and a new grid icon at the bottom of the home screen that allows fast access to all home screen pages. Noteworthy apps include the turn-by-turn GPS software Google Maps Navigation, as well as the visual search Google Goggles.

A pictured prototype featured a camera. It was running on the T-Mobile network and was connected to Wi-Fi. The hardware was described as “incredibly thin and sleek,” with four touch-sensitive buttons on its face and a volume rocker on the side. The Nexus One is said to be faster than the Motorola Droid, but to lack multi-touch support in its Web browser.