The US judge presiding over the Microsoft anti-monopoly trial gave the first indication that he is considering breaking up the software group.

In his first public remarks since finding Microsoft guilty of breaking US anti-trust laws, Judge Thomas Penfield Jackson asked lawyers for the US government and 17 US states why they had not proposed breaking the company into three rather than two.

He praised an "excellent brief" submitted by two industry associations which proposed dividing Microsoft into three companies.

The justice department and states had proposed turning Microsoft into an applications company and a company to sell Windows, the operating system used on more than 90% of the world's computers

David Boies, government senior counsel, said yesterday that a two-way split would be "quicker and more effective than a horizontal divestiture".

Judge Jackson asked if the government's proposals would not "simply create two separate monopolies which have no incentive to interfere with each other's profitability".

In a sign that the judge would like the trial, which started more than two years ago, to be over quickly, he said when offered further legal disclosure that he "did not want to see any more briefs".

John Warden Microsoft's chief counsel, said the company "fully expected to prevail on appeal wherever that appeal will be held".

The judge commented: "It is somewhat ironic that if you think you will prevail when you get to the court of appeal, you nevertheless, are asking to spend more time in this court."

Mr Warden continued to argue that the government's break-up proposals were "extreme" and "punitive", which is not allowed under the relevant anti-trust laws.

He said: "There is absolutely no precedent for what is proposed here. The court has long understood that splitting up unitary companies is an enormously complicated and disruptive process and one which neither the court nor the justice department has any natural inclination."

In a heated exchange Mr Warden and the judge discussed the consequences of Microsoft's conduct, which the judge had ruled to be unlawful.

In a typically dramatic presentation, Mr Warden argued that the government was siding with Microsoft's corporate rivals. He described a group of them, including some micro systems, and Novel, as "corporate pygmies".

Mr Warden also described the economic benefits created by Microsoft and said that a break-up could harm the future developments of the economy. "The court is thus presented with a situation in which benefits of the existing organisation are substantial and known and the benefits of busting it up are speculative and unknown and may be negative."

In presenting its argument, the government criticised Microsoft's proposals for a remedy based on business constraints as inappropriate. An email sent by Bill Gates after an earlier so-called consent decree had been agreed read: "This anti-trust thing will blow over and we haven't changed our basic business practices at all except it may change our e-mail policy."