Microsoft today lost an appeal requesting the US supreme court to overturn a verdict describing the software giant as a monopoly that resorted to illegal tactics.

In the latest stage in a long-running anti-trust battle between the US government and Microsoft, the high court declined without any comment or dissent to review the June 28 ruling by a US appeals court. Microsoft argued before the supreme court that the original ruling in the case, handed down last year by judge Thomas Penfield Jackson, was tainted because of his alleged misconduct after the trial.

Before issuing a devastating verdict against Microsoft, judge Jackson pilloried the software giant in secret press interviews by comparing Microsoft executives to common street criminals. An appeals court sharply rebuked judge Jackson in its June ruling and reversed his order that Microsoft be split in two. But the appeals judges unanimously upheld judge Jackson's verdict on Microsoft's monopoly status in the PC operating systems and its illegal tactics to maintain that dominance.

The two sides are currently locked in settlement talks at the order of judge Colleen Kollar-Kotelly, a new judge assigned to wrap up a case that began under the Clinton administration. If the two sides are unable to settle, judge Kollar-Kotelly is scheduled to hold hearings in March to determine what sanctions should be imposed on Microsoft to prevent future anti-trust violations.

Giving both sides until November 2 to reach a deal, she said last month: "If everyone is reasonable and acts in good faith, there's no reason this case can't be settled."

In a written order she put the case into the context of the terrorist attacks on the US and said it would be better for the nation if they could come to an agreement.

"In light of the recent tragic events affecting our nation, this court regards the benefit which will be derived from a quick resolution of these cases as increasingly significant," she said. "The court cannot emphasise too strongly the importance of making these efforts to settle the cases and resolve the parties' differences in this time of rapid national change."

The Bush administration, considered to be more friendly to Bill Gates's behemoth than the White House under Clinton, has ruled out a break-up of Microsoft, and has opted instead for lesser sanctions that include restrictions on Microsoft's business practices.