Working with the mindset that an Apple rumour isn’t confirmed until the Wall Street Journal comments on it, a new report from the newspaper has suggested the company will finally increase the display size of its next-generation iPhone to 4 inches.

Update: Reuters has provided its own confirmation: “The new iPhone screens will measure 4 inches from corner to corner,” according to its sources.

The WSJ says that the smartphone will be increased from its traditional 3.5-inch design, according to its sources, and will begin production in June with the view to a launch later this year:

Apple Inc., which is expected to launch its next-generation iPhone later this year, has ordered screens from its Asian suppliers that are bigger than the ones used in iPhones since they debuted in 2007, people familiar with the situation said.

Production is set to begin next month for the screens, which measure at least 4 inches diagonally compared with 3.5 inches on the iPhone 4S, the latest phone from Apple, the people said.

Here’s what we believe a bigger iPhone could look like:

IMG 2615 520x333 Apples new iPhone to feature 4 inch display, start production in June: Report

The report is somewhat contradictory with its statements that Apple is “trying to make its popular smartphone more appealing amid intensifying competition from rival Samsung.”

Further down the article the WSJ quotes an analyst as saying that a new iPhone with a larger screen “wouldn’t mean that Apple is making changes because of what its rivals are doing.”

We are more inclined to agree with Mizuho Investors Securities analyst Nobuo Kurahashi:

“The smartphone market has become diverse, but the iPhone still sets the agenda,” with the whole industry watching Apple’s every move, he said. He said that the iPhone’s strength lies in the overall experience including its user interface and applications, and the screen’s size wouldn’t be its defining feature.

“If Apple ever released a lower-priced iPhone, that would be more of a sign that the changing market environment is beginning to affect the company,” he added.

Apple’s new displays are set to be supplied by LG, Sharp, and Japan Display (a Sony, Hitachi, and Toshiba joint-venture).