Software giant Microsoft has proposed a settlement to an antitrust suit lodged against it by the US Justice Department and 19 states, it was reported yesterday.

But prospects that a deal might emerge any time soon were considered slim, as government officials were said to be unimpressed by the Microsoft offer.

"The proposal they made was very minimalist," one official told the Washington Post. Microsoft reportedly offered to modify its contracts with personal computer manufacturers which require them to favour the use of Microsoft products.

In addition, according to the Post, the company is now prepared to consider allowing computer-makers to change certain components of its market-dominant Windows operating system - in particular the desktop icon for the Microsoft browser Explorer.

Such a move would enable manufacturers to offer rival browsing technology in their computers. But on one issue Microsoft has refused to compromise: its right to innovate and add new features to Windows, the operating system now in use in nine of every 10 personal computers worldwide.

Microsoft chairman Mr Bill Gates on Wednesday confirmed persistent press speculation about a possible deal, telling an interviewer "we'd love to settle this thing". "Our lawyers are in constant contact with the government lawyers," he said.