The move follows a failed bid to buy Groupon for $6bn (£3.8bn) late last year.
Google Offers will operate in a similar way to existing group buying sites such as Groupon, Living Social and Groupola, by offering daily discount deals on services and products from local businesses.
The site will also include social networking tools such as Twitter and Facebook.
The web giant says its Google Offers programme will help small businesses grow by bringing in new customers and gaining exposure on Google’s ad networks.
In a statement Google says: “Google is communicating with small businesses to enlist their support and participation in a test of a pre-paid offers/vouchers program.
“This initiative is part of an ongoing effort at Google to make new products, such as the recent Offer Ads beta, that connect businesses with customers in new ways. We do not have more details to share at this time, but will keep you posted.”
Groupon, which was named by Forbes last year as the fastest growing company ever, recently completed a $950m (£610m) round of financing, ahead of a suspected IPO later this year.
Google announced today that co-founder Larry Page will take over as chief executive in April as Eric Schmidt steps down after ten years. Schmidt will become executive chairman.
Google’s UK and Ireland MD, Matt Brittin, will be our cover profile next week – look out for it.