Amazon will launch a Kindle ebook reader with a full colour screen later this year, having placed an order with screen manufacturer E Ink for 6-inch colour touchscreens.

The news comes from Chinese newspaper Economic Daily News and via tech rumour mill DigiTimes, so it should be taken with a pinch of salt, but Amazon has been rumoured to be developing a colour Kindle for some time.

The Chinese paper believes E Ink will ship over three million colour e-ink displays each month, which would seem appropriate as the company claimed to sell around one million Kindles per week in the run-up to Christmas.

DigiTimes said: "E Ink Holdings (EIH) reportedly has landed orders for 6-inch color ebook reader modules from Amazon with shipments to begin in March"

We'd be surprised if Amazon released a colour Kindle as soon as March, as the current range only arrived in October 2011 - it is more likely that the retail giant would wait until the third quarter to announce the new model.

Not to be confused with the Kindle Fire tablet - which uses a colour LCD screen and runs the Android operating system - a colour Kindle ebook reader would mean having the benefits of an e-ink display with, for the first time, colour.

E-ink displays do not have back-lighting and are therefore similar to read as a traditional book. A colour Kindle would open up possibilities for magazine publishers to create full-colour applications for the Kindle.

Adding a colour screen to the Kindle is an obvious move for Amazon to make and we would expect a colour Kindle to appear in the third quarter of 2012 in time for Christmas. The company is also expected to release a second-generation Kindle Fire tablet internationally around the same time.