The US justice department today said it was no longer seeking the break-up of Microsoft and wanted to wrap up the three-year-old case "as quickly as possible".

In a statement that boosted the technology giant's shares, the department said it would also drop an unresolved claim that the company illegally tied its Internet Explorer browser to its Windows operating system.

"The department of justice's antitrust division today advised Microsoft that it will not seek a break-up of the company in remand proceedings before the US district court," the statement said. "The department is seeking to streamline the case with the goal of securing an effective remedy as quickly as possible."

The announcement came after a judge ordered the two sides to produce a joint report on their dispute by September 14.

The change of tack in one of the biggest antitrust cases in US history ever was not entirely unexpected. Earlier this year the incoming attorney general, John Ashcroft, refused to give a firm answer when pressed by senators about the government's commitment to pursuing the lawsuit against Microsoft. The case was brought by the justice department and 19 states under the Clinton administration.

Today's decision is in marked contrast to what is going on in Europe. Last month, the European commission stepped up its inquiry into Microsoft when it accused the US software group of illegally tying video and audio software into its Windows operating system. The EC alleged that Microsoft might have broken the law by using its monopoly to thwart competition in the server market.