70-year-old Hawking has been working with scientists at Standford University of the US who are developing iBrain - a tool which picks up brain waves and communicates them via a computer, the Daily Mail reported.
Hawking has been unable to speak for the last 30 years due to the motor neurone disease which is ravaging his body and weakening his muscles.
He currently uses a computer to communicate with a robot-like voice, but is losing the ability as his condition is worsening by the day.
Hawking was fitted with a black headband which has a series of neurotransmitters inside it and was told to think about scrunching his right hand into a ball.
He was able to create a pattern which the researchers hope they can one day convert into letters, words and sentences, the report said.
The iBrain has been developed by Philip Low, a professor at the university.
It is about the size of a matchbox and is very light so does not weigh down Hawking's head.
Professor Low said he hopes that it will be able to monitor him in real time, regardless of what he is doing.
"We'd like to find a way to bypass his body, pretty much hack his brain. This is very exciting for us because it allows us to have a window into the brain," Low said.
"We're building technology that will allow humanity to have access to the human brain for the first time.
"The emergence of such biomarkers opens the possibility to link intended movements to a library of words and convert them into speech, thus providing motor neurone sufferers with communication tools more dependent on the brain than on the body," he said.
Low will unveil his latest findings next month at a conference in Cambridge, and Hawking may demonstrate the technology.
It could also be used to treat sleep disorders and possibly help to quickly diagnose autism, the report said.
