Microsoft and Yahoo have reached an agreement that will see the two join forces to win greater market share.

Under the terms of the ten-year deal, Microsoft's Bing search engine will be incorporated into Yahoo's website, while Yahoo will coordinate marketing and sales operations.

Microsoft said in a statement that the aim is to give internet advertisers an alternative to Google, noting that businesses should not be forced to rely on "one company that dominates more than 70 per cent of all search".

Steve Ballmer, chief executive officer at Microsoft, explained that Bing will be able to compete on a larger scale due to Yahoo's resources.

"Through this agreement with Yahoo, we will create more innovation in search, better value for advertisers, and real consumer choice," he remarked.

Mr Ballmer's counterpart at Yahoo Carol Bartz said that the deal will benefit both Yahoo users and the online industry as a whole, adding that it symbolises a "new era" of innovation and development online.

The announcement comes after Yahoo launched a redesigned homepage last week, which gives users new features such as Trend Setter - which shows the most popular internet search term trends - and the option to update social networking websites such as Facebook and MySpace.