Yahoo and Virgin Mobile today agreed a deal that makes Yahoo the exclusive search service for Virgin's four million mobile subscribers.

The deal is a fresh attempt by Yahoo to steal a lead on Google in the mobile search and advertising markets, having lost the battle for dominance in the desktop computer search market. It is spearheading its European efforts in the UK.

The co-operation will be unveiled to Virgin Media customers with the launch of a new mobile internet service next week. Yahoo is trying to make itself a favourite starting point for internet consumers, providing easy access to popular services and relevant information without needing to own the services and information.

Mitch Lazar, head of Yahoo's mobile operations in Europe, said Yahoo's next target markets would be France, Germany, Italy and Spain.

Microsoft, which has failed in two attempts to acquire Yahoo, was reported to be planning to buy Yahoo's online search business for £13 billion in a deal led by former Fox Interactive Media president Ross Levinsohn. However, Levinsohn called the report "total fiction".