The Blackphone is described by its makers as "the world's first smartphone to put privacy and control ahead of everything else."
The Blackphone is being developed by US-based company Silent Circle and Geeksphone, a Spanish handset maker.
Using cryptography ways of masking information and communications the device is able to make and receive secure phone and video calls, as well as exchange encrypted text messages, 'The Times' reported.
"The number one priority of creating Blackphone is to uphold the objectives of privacy," said Phil Zimmermann, president of Silent Circle and co-founder of the Blackphone project.
"It's not to serve some other business model of monetising customer data. What we're trying to do is to make a smartphone whose whole purpose is to protect privacy," he said.
However, the phone's makers have not explained key questions raised by experts, such as whether secure calls can only be made between two Blackphones, or exactly how its encryption technology would make it beyond the reach of hackers.
The group will give more details about the handset during Mobile World Congress in Barcelona next month.
Blackphone comes as part of a growing effort among technology companies to protect personal information of mobile phone users.
According to the latest leaks from whistleblower Edward Snowden, the US National Security Agency (NSA) collected almost 200 million mobile phone text messages a day from around the world that allowed it to extract contact networks and credit card data of users.