Internet giant Yahoo! has turned in a profit for the first time in 18 months, saying it had put the dotcom bust behind it and was rapidly signing up new advertisers and paying customers.

In a sign it is turning a corner in its efforts to support advertising revenue with subscription charges, it made a better than expected profit of £13.8m in the second quarter.

This compares with a loss of £31.4m in the same period last year. Revenues rose to £146m, up 24% on the previous year.

The company had previously suffered six straight quarters of losses after being hit severely by the advertising downturn, forcing it to lay off staff.

Terry Semel, the chief executive of Yahoo!, who in common with other internet bosses has been seeking to downplay expectations, indicated the company was still in transition.

After adding fees to more than 20 of its services, the majority of payments were still coming in from personal ads and email features, he said.

Yahoo! now has 1 million paying customers, up from 600,000 at the end of the first quarter, and Mr Semel predicted it could pass 2 million by the end of the year.

He also suggested there could be further layoffs on top of the 400 announced during the last year.

Mr Semel said the company would continue to "streamline aspects of the company that no longer resonate".

"As we execute against our business plan, we expect to continue to deliver strong results and profitable growth through the remainder of the year," he added.