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The partnership, according to sources close to the development, is expected to bring affordable pre-paid and post-paid data plans to allow users to surf, upload pictures, update status messages and chat with their Facebook friends.
While the details of the phone are not known, the sources say the device is likely to be similar to the one Vodafone unveiled last month, the Vodafone 555 Blue, which sports a dedicated Facebook button and comes with a proprietary operating system.
Vodafone 555 Blue users are directly logged in to their Facebook accounts, as soon as they turn the device on. They can also sign up on the social network if they don't have an account already.
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Vodafone's Facebook branded phone is essentially a feature phone that comes with a 2.4-inch screen, a QWERTY keypad. The phone lacks 3G & Wi-Fi connectivity and instead, works on 2.5 G and Edge networks.
According to Facebook sources, this deal is the latest mobile partnership in India for Facebook, which has repeatedly denied reports that it is keen on launching a dedicated 'Facebook phone', saying it favoured a strategy of deep integration with many handsets.
Gartner principal research analyst Vishal Tripathi says, "Vodafone needs to price this feature phone aggressively, at about Rs 4,000-Rs 5,000, as vendors like Micromax have already launched Android smartphones at Rs 8,000. The data plans for such a device should be between Rs 250 and Rs 300, giving users the freedom to buy a daily pre-paid plan for Rs 10 or so."
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He says most handset vendors have social networking phones in their portfolios, and the only way Vodafone can sweeten the deal for customers is by giving them a cheaper handset, with a closely integrated Facebook experience that is vastly better from what other feature phones deliver today.
Early this year, Facebook had announced similar tie-ups with device manufacturers INQ and HTC.
Android devices from INQ - Cloud Touch and Cloud Q - featured Facebook integrations with a single sign-on and easy one-touch access to popular Facebook features.
The home screen featured the user's news feed, including friends' updates, pictures, videos and links, and quick links to chat, messages, places and notifications.
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HTC's ChaCha and Salsa phones, too, sport a dedicated Facebook button that gives a one-touch access to the social network's functions. Facebook chat, messages and friends are closely integrated within these devices.
When users make a phone call, the screen displays the friends' status updates and photos, and even their birthdays.
With 33 million Indian users, Facebook maintains a strong lead over other social networking sites such as Google's Orkut, the latest entrant, Google+, and micro-blogging site Twitter.
According to Informate data, about 66 per cent of mobile handset users in India access Facebook on their mobile phones, and about 20 per cent of mobile subscribers use Facebook apps on their smartphones.
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Handsets like the Vodafone's 555 Blue complement Facebook's efforts to increase its base in emerging markets like India.
In May 2010, the social network had launched 0.facebook.com, a vanilla mobile site with zero data charges, together with Reliance and Videocon.
Though Apple is yet to launch integrated Facebook apps on its devices, it has reportedly struck a deal with Twitter, which is expected to be a flagship feature of its upcoming iOS 5 software upgrade.