Development team reportedly headed up by Zuckerberg himself.
Facebook is close to finalising a video messaging application similar to Snapchat and could release it as early as next week.
The service, codenamed Slingshot, has supposedly been under construction for several months, with development apparently headed up by company CEO Mark Zuckerberg.
The service will be similar to existing apps such as TapTalk, in which users tap or hold a contact's profile picture to instantly send a photo or short video, which can then be viewed only once by the recipient, reports said.
It will be distinct from the existing Facebook Messenger app, which lets members send instant messages to each other, with the communications also being displayed in their Facebook accounts.
However, there was confusion as to the development status of the app, with a source telling the Financial Times that it will be released this month, or not at all, as the company may decide not to complete the project.
Snapchat, which was first released in July 2012, has sent more than 400 million 'snaps' - images or short videos which are deleted after a pre-selected amount of time - since its inception. It has proved extremely popular which teenagers, a vital target market for Facebook as it seeks to hold on to its dominant position in the social media space.
Last week the company announced the app will now support text messaging and video calling, widening its potential user base and putting it in direct competition with companies such as Skype and WhatsApp.
Facebook had a $3bn offer for Snapchat rejected last year, and last week announced that its Poke app, launched in December 2012 as a rival to Snapchat, would close due to lack of popularity.
The release of Slingshot may raise some questions regarding Facebook's $19bn acquisition of WhatsApp, which was completed in February. The service, which has 500m regular users, is also able to send video messages, albeit without the timer aspect seen in Snapchat.
Facebook is yet to comment on the report.
Source: Company Press Release