Tonight's event comes at a time when Apple is also expected to reveal its latest operating system - due for release in September.
Chief executive Tim Cook dubbed iOS7 the "biggest change to iOS since the introduction of the iPhone" when he announced the new softwear earlier this year.
The system has been designed to make the iPhone appear bigger, with features crafted to take advantage of the entire screen.
Ernest Doku, telecoms expert at comparison site uSwitch.com, said the event could be "one of the most exciting yet" from Apple and added: "a cheap and cheerful iPhone could be the silver bullet needed to halt Android's rise."
"The latest word is that two iPhones will make a simultaneous appearance - a premium sequel in the iPhone 5S, and a low-cost iPhone 5C," he said.
"Much like the compact iPad mini lowered the barrier to entry and effectively introduced tablets to an entirely new demographic, a more affordable and attractive iPhone could attract the lucrative mid-range market in droves."
Jan Dawson, chief telecoms analyst at research firm Ovum, said targeting markets in countries such as China with a cheaper handset was key for Apple to drive growth.
"The cheaper iPhone is critical for expanding the addressable market, because many people in China and elsewhere simply can't afford to buy a current generation iPhone, especially when it's not subsidised," he said.
"However, the key risk for Apple in launching a cheaper iPhone is that it may cannibalize sales of the high-end phone... The trick is for Apple to position a cheaper device so that it's attractive for those that haven't been able to afford an iPhone before, but is missing enough key features for the new flagship iPhone to remain compelling."
