The battle to produce the computer operating system at the heart of the next generation of mobile telephones and Internet-browsing palmtop computers has taken an extraordinary turn. Psion, the British hand-held computer company, has revealed that it is discussing an alliance with its main American rival, 3Com, in order to take on Microsoft.

Psion, best known for its electronic organisers, has already reached a preliminary deal with 3Com subsidiary Palm Computing to share its technical knowhow. A cross-licensing deal is now planned between Palm and the Symbian joint venture which Psion struck with the world's leading mobile telephone makers last year.

Symbian, which takes in partners such as Nokia and Motorola, is developing Psion's Epoc operating system for use in various mobile devices which will handle enormous quantities of information as well as voice communications at high speed.