Yahoo! sent a very public signal that it continues to explore alternatives to its mooted sale to Microsoft as it announced plans to test Google’s search advertising technology on some of its web sites.

The Internet group has agreed to outsource its web search advertising to Google for two weeks to determine the revenue potential of a broader search outsourcing arrangement.

The test will be limited to US searches and will apply to less than 3 per cent of its total web search queries.

However, the agreement sends a clear signal to Yahoo!’s investors that it is exploring alternatives to Microsoft’s interest, which it first rebuffed on February 11, saying that it "significantly undervalues" the group. Microsoft would be particularly sensitive to Yahoo! tie-up with Google, which is a major rival.

A long-term deal between Yahoo! and Google would boost Yahoo!’s cash flows because Google’s system is far more efficient at flashing up ads that are relevant to a web search. Yahoo would keep most of the revenue generated on its sites, but would pay Google a significant commission for its expertise.

The test emerged two days after Yahoo! said it was willing to negotiate with Microsoft about a potential takeover if the software giant was prepared to raise the value of its $39.4 billion bid for the search engine. That disclosure came in an open letter from Roy Bostock, the Yahoo! chairman, in response to threats from Microsoft that it would make a hostile bid in the next three weeks if it did not enter negotiations.

Mr Bostock said: "We are open to all alternatives that maximise stockholder value. To be clear, this includes a transaction with Microsoft if it represents a price that fully recognises the value of Yahoo! on a standalone basis."

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