The three countries are aiming to have the global standard for the technology set in Asia, the Nihon Keizai Shimbun said.
US firms now dominate the market for equipment like routers that serve as the infrastructure for the current IPv4-based internet.
By working together, the three countries aim to take the lead in developing technologies for a world in which all equipment is connected to the internet, the business daily said.
Japanese government and technology company officials were either unable to confirm the report or unavailable for comment during the New Year's holidays.
"The Japanese government has discussed IPv6 (Internet Protocol Version 6) with China and South Korea at ministers' meetings, but I'm not aware of any new development," said a spokesman for Hitachi Ltd, one of the Japanese firms mentioned in the report.
"Our company has no specific plans in terms of tripartite development," he said.
Nippon Telegraph and Telephone Corp, Hitachi, Fujitsu Ltd, NEC Corp, Matsushita Electric Industrial Co Ltd, Mitsubishi Research Institute and Internet Initiative Japan Inc will participate in the effort, the newspaper said.
"IPv6 offers a virtually unlimited number of IP addresses"
"IPv6 offers a virtually unlimited number of IP addresses," it said.
Because there will be a shortage of IP addresses under the current protocol, IPv4, a full-scale move to adopt IPv6 is expected to begin around 2005, it said.
"This will enable a myriad of devices from home appliances to autos, security systems and smart tags to have their own addresses, allowing for remote operation and management of the equipment," Nihon Keizai said.
More firms to take part
Korea Telecom and the Samsung group, as well as Chinese firms like China Telecommunications Corp, are also expected to take part, it said.
The Ministry of Public Management, Home Affairs, Posts and Telecommunications Ministry has allocated two billion yen ($18.5 million) in annual funding for constructing a IPv6 network in Japan, connecting about 100 ordinary households, local governments and corporations.
China and South Korea will construct similar networks, which will be connected with the Japanese version and with each other, creating an international IPv6 network with common standards, the report said.