Hopes of a rescue for stricken broadband provider Tiscali were raised today as Carphone Warehouse reportedly eyes a last minute bid for its UK broadband business.

Tiscali, which had almost 1.8 million UK broadband customers at the end of September last year, saw its shares suspended earlier this month after negotiations with BSkyB collapsed.

Carphone's TalkTalk broadband division is now looking to strike a deal for the Italian firm's UK arm and pick it up at a bargain price, according to reports.

Tiscali is understood to be close to collapsing into administration.

Tiscali put its UK business up for sale last year as it sought to reduce its debts, which are now thought to total around 600 million euros (£559.6 million).

It is understood to have received a stay of execution from its creditors, who agreed to suspend interest payments on the firm's debts.

Tiscali, which employs around 700 staff in the UK, was formed in 1998 following the deregulation of the Italian telecoms market.

The Cagliari-based firm takes its name from a 2,000-year-old village hidden in the centre of Sardinia where the population used to shelter from invaders.

Carphone founder Charles Dunstone has said he is considering splitting the TalkTalk broadband business from its retail operation.

The move comes after Carphone sold a 50% stake in its retail business to US electronics firm Best Buy for £1.1 billion as it looks to enter the European market for the first time.

TalkTalk was launched in 2003 and has around 2.8 million customers, making it the UK's third largest broadband provider.