There had been rumours that the deal was off, but now Yahoo and Google, it seems, are pushing ahead with their ad deal, but have greatly scaled it down.

The Wall Street Journal reported last week that both companies were prepared to walk away from the deal as a result of probes and opposition on both sides of the Atlantic.

However, Reuters is now reporting that the two companies are going to push for a deal, but have scaled back the scope of their agreement in a bid to win the US antitrust authorities over.

"A person close to the discussions" told the news agency that Google and Yahoo have submitted a reworked proposal to the US Department of Justice.

The main change is that they have shortened their partnership to just two years from 10 years.

"The revised deal also caps the percentage of search revenue that Yahoo can collect from Google at no more than 25%, and lets Google advertisers opt out of being placed on Yahoo", the source told Reuters.

Yahoo and Google aren't commenting.