DR Tony O'Reilly has offered to buy Mirror group's stake in the London Independent for £60 million, it emerged last night.

A day-long crisis meeting at London's Berkeley Hotel, involving Dr O'Reilly, Mirror group chief executive Mr David Montgomery, and Independent editor Mr Andrew Marr, broke up with the ownership issue unresolved.

It is understood Mr Montgomery believes 46 per cent stake is worth £10 million more than Dr O'Reilly, chairman of the Irish Independent group, is prepared to pay.

Mr Marr is understood to have successfully fought off an attempt by Mr Montgomery to impose a 10 to 15 per cent editorial budget cut on the newspaper. Sources said he could even have won a marginal increase for the time-being.

The Independent lost £18.6 million last year, and despite increasing advertising revenue and a cover price increase, is heading for a £15 million loss this year.

Circulation last month fell to 261,000, a 4 per cent drop on the previous month. The six-monthly average has dropped by 9.6 per cent since 1995.

There was speculation the budget could be re-examined in six months' time. The paper's staff believe there is little scope for further cuts more than 80 posts have been lost in 18 months.

It is thought Dr O'Reilly believes the current ownership structure and editorial cost-cutting is endangering the paper's viability.

If he assumed control, industry sources speculate he would seek to switch management and administrative functions to Lord Hollick's United News and Media, owners of the Express and Express on Sunday.

Journalists would move from Mirror group's Canary Wharf headquarters to the Express offices near Blackfriars Bridge. Printing would move from the Mirror presses to West Ferry.

Mr Montgomery could face city pressure to accept Dr O'Reilly's overtures. He is seeking to reschedule the group's debts, with losses at the cable channel Live TV and the Independent causing concern.