It will also come equipped with a near-field communications (NFC) chip, which allows devices to make mobile payments and transfer files to other tablets or phones.
The Nexus 7 will reportedly be manufactured by Taiwan-based hardware company Asus.
If the rumours of the Nexus 7 are true, it is expected Google will announce the tablet at its developers conference tomorrow morning.
According to Gizmodo, the tablet will have a speedy release and go on sale in Australia next month.
Commentators do not believe the Nexus 7, if announced, will be a direct rival Apple's iPad, which has a larger 9.7-inch screen and is around double the price.
According to US website Business Insider the move would be "an attempt to take down the [Amazon's] Kindle Fire" in the hope of it becoming the second most popular tablet in the market.
If the Nexus 7 is the announced tomorrow it would come just over a week after Microsoft unveiled its new tablet.
The Microsoft "Surface" device will come with Windows 8 and a fold down "multi-touch" keyboard which the company said will allow users to type faster than using an on-screen keyboard.
While the Nexus 7 may be taking aim at the Kindle Fire, the Surface is believed to be targeting the iPad.
According to Microsoft chief executive Steve Ballmer the new tablet is part of a "whole new family of devices" the company is developing.
NEXUS 7 - Rumoured specs:
* 7 inch screen
* 1GB of RAM
*8GB or 16GB of internal storage
*Priced between US$199 and US$249
*9 hours of battery life
