The battle to control advertising on mobile phones was ramped up today as Yahoo! launched a new search service tailored to handheld devices.

The move comes amid speculation that Google is planning its own assault on the mobile market, possibly by launching a new “Gphone” product.

Both Yahoo! and Google are aiming to secure mobile advertising revenues - a market expected to grow eightfold in the next four years, to about $11.5 billion (£5.9 billion). Mobile phone makers and operators, both facing saturated markets in the West, are also keen to sell more sophisticated “smart-phone” services to boost revenues.

Hoping to steal a march on Google, Yahoo! today made its oneSearch service available to mobile users in the US without them having to download special software. The service will be rolled out in the UK in the next few months.

The service is more sophisticated than that so far offered for mobile phones by Google, which has concentrated its mobile efforts around its mapping tool and e-mail. Google’s failure to roll out a convincing search service for mobile has fuelled speculation that the company is preparing to unveil a new system angled at handheld devices.

Previously, mobile users who wanted to access Yahoo!’s mobile search engine had to download a software client to their handset, or buy a phone with it already installed. Yahoo! has already made deals with Nokia, Motorola, RIM, LG and Samsung, the handset manufacturers, to have its search client pre-installed on certain handsets.

Yahoo! also has a deal in place with HTC, a Taiwan-based company that has been named as a possible partner to Google in its mobile plans.

Yahoo!’s mobile search engine has been designed to tap into localised advertising. For example, if a user types the title of a film into the search engine the results would first list the film, including a user rating, local theatres where it could be watched and news headlines related to the title.

With mobile users reluctant to download new software, Google, Microsoft and Yahoo!, the three leading internet companies, have been racing to persuade mobile-phone manufacturers to pre-install their services on handsets.

Google recently signed a deal with Samsung, under which the Korean electronics giant will include a bundle of Google applications, such as its mapping service and e-mail on its mobile phones.

In these terms, Microsoft could have an advantage, as it is the only internet player to have its own mobile operating system - the core software plank on which other applications run. Last month Microsoft said it had signed up LG Electronics, Toshiba and Hewlett-Packard to build handsets that would run on its Windows Mobile OS.

However, with Symbian, the rival mobile operating system, accounting for about half the smart-phone market, Microsoft is far from replicating its dominance in PCs.

Earlier this month Microsoft said it would buy Tellme Networks, a company that specialises in technology that allows people to search the internet by speaking instead of typing, for an estimated $800 million. It is thought the technology will be used in Microsoft’s efforts to move in on mobile search.

Steve Ballmer, the Microsoft chief executive, said: “Speech is universal, simple and holds incredible promise as a key interface for computing.”

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