Yell has sales of �1.2bn

The company, which could be valued at about �2bn ($3.3bn), will announce its plans to list within the next two weeks, several newspapers reported.

London's stock market has seen a dearth of new listings over the past two years due to the turbulence of share prices.

Yell's flotation would dwarf any new listing seen so far this year, with the biggest float to date - the insurance broker Benfield Group - worth just �157m.

Yell, which was spun off from a cash-strapped BT in 2001, shelved its original plans to float just under a year ago.

The offering of such a firm will be a test of whether investor confidence is really returning to the market.

FTSE 100 contender?

The company is expected to seek buyers for at least �1bn shares.

The company generates a lot of cash and is therefore seen as an ideal candidate to test the appetite of investors for new listings.

The sale would allow a partial exit for Apax & Hicks Muse and Tate & Furst, the private-equity firms that bought Yell from BT for �2.1bn in 2001.

The news comes as Yell faces an assault from its former parent, BT, which is breaking into the market for phone number retrieval services.