The technology is being pioneered by Leia Display Systems, a company named after the Star Wars heroine.
To make the image, the caller will sit in front of a specialised camera that has two lenses to create a single blended image.
A hologram machine receives the image and will then beam it on to a water-vapour screen in 3-D. With the use of the microphone, the hologram image will speak and move in real time, 'The Times' reported.
The makers aim to have a working model of the telephone operating by next year and hope to have the product for sale within five years.
"We are on the frontier of technology that was imagined in movies 40 years ago. It will be as if loved ones, friends and family are standing right in front of you," said Marcin Panek, chief executive of Leia Display Systems.