The group is in talks with UK mobile phone operators about renting space on their networks to carry the service, according to The Daily Telegraph.
The service, which will be SIM only, is expected to launch in the last quarter of 2008. Tiscali will not get involved in subsidising handsets, and customers will have to use their existing phone or buy one themselves.
It will be created from ToucanMobile, which Tiscali acquired last year when it paid £210m for the consumer internet and voice arm of Pipex.
The group plans to rebrand Toucan, which launched two years ago and has just 7,000 customers, under the Tiscali name.
Toucan currently leases space on T-Mobile's network with a contract that has less than a year left to run. The contract is not exclusive and Tiscali is already talking to other major network owners.
Tiscali is expected to offer the mobile service as part of a package of services including TV, voice calls and internet connections.
Mary Turner, chief executive of Tiscali, believes that Sky's "See Speak Surf" campaign has helped create consumer demand for buying a package of services from one supplier and that mobile will be accepted a part of that package this year.
Turner said: "It's all about timing. The market will be ready but you have to make it absolutely convenient for the customers to buy that fourth product."
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