Yahoo is using delay tactics in a bid to gain more time to either fight off Microsoft's $41.7 billion buyout bid or to get the computing giant to give it better terms.

Reuters is reporting that Yahoo has extended its deadline for nominating board directors.

There had been rumours that Microsoft was going to launch a proxy battle with Yahoo by nominating its own board members, which would be support its takeover bid.

The original deadline was 14 March, but now it, and therefore any proxy battle, have been postponed ands a new deadline of 10 days after Yahoo's annual shareholder meeting has been confirmed.

In the meantime, Reuters is reporting that Yahoo has "accelerated" talks with Time Warner-owned AOL as a possible alternative to facing the music with Microsoft.

Yahoo chief executive Jerry Yang told employees in a letter that the extension would still allow Microsoft to nominate directors to its board, but the main aim was to create some breathing room.

"In light of the current circumstances, this change removes an imminent deadline", Yang said in the letter, which was filed with the US Securities and Exchange Commission.

"Microsoft, of course, could still choose to name directors, but our objective here is to enable our board to continue to explore all of its strategic alternatives for maximizing value for stockholders without the distraction of a proxy contest", he said.

Yahoo has said the Microsoft offer significantly undervalues its worth, while Microsoft insists the offer is "fair".