Pressure is now on Permira to come up with an offer

A previous offer from Permira stalled over demands for a cash injection to plug a gap in WH Smith's pension fund.

Permira is said to be disappointed by the deadline and the "put up or shut up attitude," Reuters news agency reports.

Reports suggested a new bid could be worth �850m ($1.6bn), which is lower than the previous bid of �940m.

�200m gap

Takeover Panel deadlines came into the spotlight this week when retail tycoon Philip Green was forced to pull out of a bidding battle for British retailer Marks & Spencer.

Mr Green had been given a deadline of 6 August to launch a formal bid but he said he was forced to pull out because he did not have time to win the backing of shareholders.

Talks between Permira and WH Smith collapsed last month after the venture capital firm said it was unlikely to make a bid because of the demands of the WH Smith pension trustees.

The trustees insisted that any bidder must pledge to fill the near-�200m gap in the pension pot before a deal could be struck to buy WH Smith.

WH Smith became vulnerable to takeover after it announced in April that its high street shops were delivering "unacceptable" results and half-year profits had plunged 29%.

Fierce competition from supermarkets and internet retailers has eaten into its core business which sells books, records and DVDs.