Microsoft has reached a tentative settlement with the US Department of Justice in the landmark antitrust battle, reports claim. The two sides are expected to announce a plan that could end the long-standing case today.

The settlement hasn't been finalized, but it's reported the deal requires Microsoft to give computer makers more flexibility in determining how software applications are displayed on Windows PCs. It defines how much source code Microsoft would have to share with other developers.

The settlement expires after five years, and would be extended by two years if Microsoft was found to have violated it, The Washington Post said.

State dissent However, it is unlikely that the 18 states that are also plaintiffs in the case will go along with the deal. The position of the states embroiled in the antitrust bout is critical piece to the ongoing settlement discussions.

The states have made it clear in earlier statements that they are seeking harsher penalties to impose on Microsoft, which has been ruled a monopolist for the way it maintained its dominant share of the market for desktop operating systems.

In September California attorney general Bill Lockyer said the states would continue litigation against Microsoft if they were not happy with any settlement by the DOJ. He added: "We look forward to continuing to work with the Department of Justice - but will, if necessary to protect the public, press for remedies that go beyond those requested by the Department of Justice."

Net competition The states seek a forward-looking remedy to ensure that competition in the Internet industry is not harmed by the release of Microsoft's new operating system. The states claim: "It is imperative that Microsoft not have another opportunity to use Windows XP to suppress competition in emerging Internet areas."

The stipulations reportedly included in the proposed settlement agreement fail to deal with issues that critics have raised regarding Windows XP and the company's future Internet projects.

The Senate Judiciary Committee was scheduled to begin an investigation into Windows XP and other competitive issues involving Microsoft's Internet products and services in early September. Following the September 11 terror attacks on the United States, the committee buried the issue under a slew of new legislation to combat terrorism.

"Clearly the Senate is dealing with very important issues related to the September 11 tragedy and aftermath of that. It's understandable how their agenda has changed," said an observer.