Microsoft has reignited the possibility of a deal with Yahoo, by declaring that it is pursuing a transaction with the search pioneer - albeit one that falls short of a full acquisition.

In a statement issued yesterday, Microsoft said it was "continuing to explore and pursue its alternatives to improve and expand its online services and advertising business".

"Microsoft is not proposing to make a new bid to acquire all of Yahoo at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo or discussions with shareholders of Yahoo or Microsoft or with other third parties," the statement continued. “There of course can be no assurance that any transaction will result from these discussions.”

The news came days after billionaire tycoon Carl Icahn, a major shareholder in Yahoo, tried to force the company to restart talks with Microsoft. The software giant withdrew its bid for Yahoo earlier this month.