Both Verizon and Qwest have increased their initial offers for MCI

The long-distance phone company has twice given Verizon's offer the nod, on the grounds that the larger company offered better prospects.

Verizon raised its bid to $7.6bn (�4.8bn) on Tuesday, prompting Qwest to increase its own proposal to $9bn.

Several MCI shareholders have been urging the firm's board to reconsider.

The decision by MCI, the number two US long-distance phone firm, extends what has become the latest battleground in an ongoing consolidation of the US telecoms industry.

AT&T - the biggest, and once the leviathan of US telecoms - has already agreed to be taken over by SBC, spun off from "Ma Bell" in 1984 and now five times its size.

Verizon has a signed agreement with MCI, that we believe will deliver superior value to MCI's shareholders Verizon Check the MCI share price Check the Qwest share price Check the Verizon share price

And AT&T Wireless, itself separated from its former parent, is being bought by Cingular, part-owned by SBC.

Verizon itself is the amalgamation of three former local telecoms monopolies.

Interesting history

MCI was formed in 2002 from the rubble of WorldCom, after it filed for the largest bankruptcy in history following an $11bn accounting fraud.

It has its roots in long-distance services, and is regarded as valuable for its one million business customers, and its large network which also carries much of the world's internet traffic.

Phone company Verizon is a powerful player in the northeast US, and has a joint mobile venture with the UK's Vodafone. A deal with MCI would give it a wider national presence.

"Verizon has a signed agreement with MCI, that we believe will deliver superior value to MCI's shareholders," Verizon said in a statement.

It has, however, given permission for the renewed MCI-Qwest talks.

Qwest is the local phone carrier in the less-densely populated Rocky Mountains and north western US.