Rumors are flying high that Apple's much awaited iPod Touch will be equipped with Camera and Microphone.

An intimate source informed that Apple's manufacturing partners have already started producing iPod Touch models equipped with cameras as well as microphones.

Apple's iPod Touch with integrated camera and microphone is expected to hit the market in the coming two or three months.

Apple's iPod Touch, which is expected to be embedded with voice-over-IP facilities, will also have the ability to catch videos and images and understand voice commands.

However, the MP3 player, which will work with a wider range of programs in the App Store, will compel its users to depend on WiFi to have connection with the Web as the device is not 3G capable.

On balancing the iPod Touch with the Skype app, the music device would turn into a VoIP-ready phone.

However, an Apple spokesman declined to comment on iPod Touch.