Nokia and Facebook are reported to be working on a deal that will see the social network integrated into Nokia’s handsets. A report on paidContent.org says the placement “could be as prominent as the YouTube button on the main screen of iPhone.” The deal also involves giving Facebook a position within Nokia retail products’ displays, it adds. “There is talk of a partnership in the works…. It’s safe to say we’re testing the waters and things still have to be worked out,” the report quotes an unnamed senior Nokia executive as stating. The report goes on to say that the discussions have also involved Nokia purchasing a stake in the company.

The report comes a week after Facebook founder Mark Zuckerberg said the site was “highly unlikely” to go public in 2008. Meanwhile Nokia, which said it was to cut 2,300 jobs last week as part of the closure of a German plant, has been making moves into the online space of late. Earlier this month it signed a deal with mobile games firm Vivendi. Last year it said it is to offer mobile users unlimited access to music downloads from the second half of 2008, via a content deal with Universal Music. Nokia has also been expanding and making deals based on its newly launched Ovi mobile platform.