Microsoft and Time Warner are holding "advanced" talks that could lead to the merger of their MSN and AOL internet businesses.

The New York Post quotes two unnamed sources who claim that TW is looking to sell a stake in its AOL business to Microsoft.

This would then be rolled into MSN, giving both TW and Microsoft an equal share in the new business.

The paper reports that while execs hope the deal can be completed shortly, TW is also holding talks with Yahoo! and Google over a possible sale should the Microsoft merger fall through.

AOL - which has seen net users leave the service in their millions over recent years - is no stranger to reports about its future.

Eighteen months ago the Post reported that Time Warner had held talks with Microsoft concerning the sale of AOL. ®

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