Microsoft yesterday struck a blow to the credibility of Netscape Communications by producing a secret letter from its rival suggesting the two companies collaborate on Internet software.

As the landmark antitrust trial of Microsoft entered its third day, the world's largest software company sought to portray Netscape as adopting similar business practices to its own.

The US government and 20 states accuse Microsoft of acting as an illegal monopoly by abusing its power over Windows - the operating software which drives more than 90 per cent of personal computers - to crush Netscape, the pioneer in Internet software.

Microsoft is alleged to have proposed a conspiracy to carve up the Internet software market between the two companies, in exchange for taking a stake in its smaller rival, at a meeting with Netscape in June 1995.

When Netscape refused, Microsoft allegedly tried to destroy its competitor's revenues and distribution channels in a series of illegal deals with the computer industry.

However, the court yesterday heard evidence drawn from an email sent to Microsoft by Mr Jim Clark, Netscape's chairman and co-founder, six months before the controversial meeting.

Mr Clark wrote: "We want to make this company a success, but not at Microsoft's expense. We'd like to work with you.

"Working together could be in your self-interest as well as ours. Depending on the interest level, you might take an equity position in Netscape, with the ability to expand the position later."

He added: "Given the worry that exists regarding Microsoft dominance of practically everything, we might be a good indirect way to get into the Internet business."

Outside the court, Netscape's lawyers sought to limit the damage caused by Mr Clark's email, saying the company had been struggling financially at the time and that Microsoft had rejected its advances.

Mr Christie Varney, Netscape's lawyer, said: "He had a lot of his own money tied up in the company. I think he was a little nervous and looking for a little more funding. The meeting six months later was in no way related to this conversation."

In court, Netscape stuck to its account of the June 1995 meeting and the accusation that Microsoft had sought to divide the market in Internet browsers, which allow computer users to read pages of information on the World Wide Web.

Under cross-examination, Mr James Barksdale, Netscape's chief executive, strongly rejected Microsoft's suggestion that its conspiracy offer was never made clear. He said: "It was as explicit as you can get, but it did not include the words `divide the market'."

He added: "I remember feeling ill-at-ease, bothered, during the course of the meeting because I did not know how to respond and I could not believe what I was hearing. It was never clear to me why they wanted to do this, why they were so anxious."