According to Silicon Alley Insider, Facebook is working on a Foursquare killer, which means they could add check-ins to locations to all their 350 million members, and become a major actor in local search.

A source briefed on the matter tells us Facebook is working on a feature that will allow users who access the network from mobile devices to “check-in” and broadcast their current location to all their friends.

Huge local business reviews site Yelp rolled out a similar “check-in” feature earlier this month.

Allowing users to “check-in” is Foursquare’s primary function.

Facebook, with its huge scale and wealth of engineering talent, could squash Foursquare. Mainly, that’s because like with Foursquare — and unlike with Yelp or Twitter — Facebook friends are your real friends.  They are the kind of people you want to see that you’ve checked-in at a bar, and then meet you there.

We’d caution that this is a single source and that plans can always change. At a place like Facebook, lots of things are always being hacked together, but no one is ever quite sure what will make it as a full release product.

Facebook CEO Mark Zuckerberg — a Bill Gates acolyte — has shown plenty of willingness to use great ideas first conceived of elsewhere. Just ask Twitter.

Reached, a Facebook spokesperson refused to comment.

For his part, Foursquare cofounder Dennis Crowley told us he fully expects Facebook and others to launch “check-in” functionality, making it “commodity by the end of the year.”

Dennis says Foursquare’s survival depends on providing “the most incentive for a user to check-in.” Right now, Foursquare awards frequent users badges and calls the users who check-in at certain venues the most “mayor.”

“I think we’re doing this better than anyone else and I think we’ll continue to do so. We have so much stuff on the whiteboard that we haven’t even touched yet… we’re really just getting started.”

Here’s who Dennis and company are going against:

Yelp

• Advantages: Scale, brand, ardent community, large app install base. More money from investors like Elevation Partners.
• Disadvantages: Not your real friends. It’s a site for writers.  No Foursquare-like gaming element.

Gowalla

• Advantages: Closer to mainstream than Foursquare. Has more money than Foursquare, from sexy investors like Greylock. Not based in New York so it’s closer to “real” America.
• Disadvantages: Not based in New York, which is the perfect city for this kind of software.

Facebook

• Advantages: Huge scale. Has tons of engineering talent. Like with Foursquare, Facebook friends are your real friends — the kind of people you want to join you when you go out.
• Disadvantages: Unlike Foursquare, Facebook can afford to fail.

Potential rivals also include Twitter and CitySearch.