The US Justice Department is on the verge of launching a major anti-trust action against Microsoft, as talks in Washington between company chairman Mr Bill Gates and government officials produced no agreement, press reports said yesterday.

While a last-minute accord is possible, according to Business Week magazine, the department wants to move before May 15th, the date on which Microsoft plans to deliver the latest version of its Windows operating system - Windows 98 - to computer makers.

The system would then be available to customers on June 25th.

Microsoft in recent days has sought to rally public support, fearing that the government may try to block the release of Windows 98 as part of a broad antitrust lawsuit against the software giant.

Mr Gates on Tuesday spent two hours locked in talks with Mr Joel Klein, head of the Justice Department's anti-trust division, but failed to reach an understanding with the government, the Wall Street Journal reported yesterday.

The antitrust division could go back to court if it determined that Microsoft had exploited its dominance of the operating systems market to stake out similar positions in other sectors, notably those connected with the Internet.

At present nine of every 10 personal computers in use worldwide run on Windows.

Microsoft is already appealing a restraining order issued by a federal judge last December. That ruling came in response to a Justice Department complaint that the company had failed to honour a 1995 agreement with the government on marketing its current operating system, Windows 95.

The department objected to the Microsoft practice of requiring computer makers to install the company's Internet browser Explorer along with Windows 95.

Judge Thomas Penfield Jackson ruled that Microsoft had to offer the browser and the operating system separately until its marketing practices had been more fully examined.