One of Perry's 'pals' told the newspaper: "Katy would love to be in the film as she is such a huge fan. She would want to play Mary Austin ideally. Katy has a similar look to Mary and would be a brilliant foil to Sacha."
Perry has previously described Mercury as her "musical idol".
"Freddie Mercury was - and remains - my biggest influence," she said during a MySpace interview in 2009.
"The combination of his sarcastic approach to writing lyrics and his 'I don't give a f**k' attitude really inspired my music," she said.
"I nearly got a huge tattoo of Freddie Mercury's face on my back a few years ago. It's probably for the best that I didn't get it done, but I still want to do it."
The rock band's guitarist Brian May confirmed Baron Cohen's involvement in 2010.
"We have Sacha Baron Cohen, which will probably be a shock to a lot of people, but he's been talking with us for a long time," May told the BBC.
GK Films' Graham King (Hugo), who is producing the movie, said in a statement at the time: "Queen is one of the greatest rock bands of all time, and a music brand all unto itself.
"Freddie Mercury was an awe-inspiring performer, so with Sacha in the starring role, coupled with Peter's screenplay and the support of Queen, we have the perfect combination to tell the real story behind their success."
The project also has the co-operation of Mercury's estate and the surviving members of Queen.
May and Queen drummer Roger Taylor will oversee music featured in the film, which will reportedly include some of their biggest hits, including Bohemian Rhapsody, We Will Rock You and We Are the Champions.
The Queen director Stephen Frears has emerged as the frontrunner to helm the project, according to a recent Variety report.
Sources close to the production claimed that although "several other filmmakers remain in the mix for the coveted gig," Frears "appears to have the inside track for the job".
Frost/Nixon scribe Peter Morgan is writing the screenplay.
Producer King recently gave an update on the in-development biopic.
"I can tell you that the working title is Mercury," he told Digital Spy. "Whether that ends up being the title of the movie, we're not sure yet."
He added: "We're working on getting the script right, but what a fantastic story to tell.
"He [Mercury] led such a big life, there's so much to tell. And then you've got all the fantastic music. It's not an easy one to put together, but I'm pretty confident we'll be shooting that next year."
Check out his interview below:
Watch the video for Queen's Bohemian Rhapsody below:
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