Microsoft and the US government have sent strong signals that they are prepared to consider an out-of-court settlement to their antitrust dispute.

Prompted by a report in the Wall Street Journal that settlement talks were about to get under way, Microsoft spokeswoman, Ms Erin Brewer said the company "was always willing to talk" with the US Justice Department.

She stressed negotiations were possible "as long as we can maintain our fundamental right to innovate".

But Ms Brewer added that Microsoft had "nothing to confirm in terms of specifics" about when and where talks might take place.

At the Justice Department, Mr Joel Klein, head of the antitrust division, said in a statement that the government had received no settlement proposal from Microsoft.

Nonetheless, according to Mr Klein, "the justice department has always been and remains open to a settlement that fully protects consumers and assures that similar antitrust violations do not occur in the future".

The Wall Street Journal, citing unnamed company officials, earlier yesterday reported that Microsoft and government lawyers were taking the advice of US District Court Judge Thomas Penfield Jackson, who last month - prior to a court recess - privately urged the parties to consider a settlement.

The antitrust case against Microsoft got under way before Judge Jackson last October and is now in recess until April 12th.

The Journal said the two sides were still deeply at odds on key issues, making it unlikely that a deal would be struck before the proceedings resume.

The US Justice Department has charged Microsoft with having exploited its dominance of the operating systems market to squelch competition and stake out a similar position in the Internet products sector.