A link-up between the UK's Psion and American giant 3Com's Palm Computing could lead to their shared technology becoming the industry standard for accessing the Internet via handheld computers.

Psion's operating system is to be used by rival Palm.

Psion said it hoped the deal would ensure that Microsoft did not dominate the handheld computing market to the same extent as it had the desktop market.

The technology sharing will essentially see new products which look like Palm computers but which use the quicker Psion-developed Epoc operating system.

The link will initially see Nokia - a partner of Psion's in the Symbian joint venture - collaborate with Palm to create pen-based computer phone products.

Threat from Microsoft

These will have the Palm 'look' and allow customers to use a pen to input information.

In addition to Nokia, the Symbian partners are Ericsson, Motorola and Matsushita. Between the four they make 80% of the world's mobile phones. Such dominance has led to Epoc being widely touted as the standard for the next generation of wireless computers.

To date Palm Computing has been one of Psion's biggest rivals in palm top computers.

Microsoft itself has recently teamed up with British Telecom to create Internet services via mobile phones and hand-held computers.

It has developed Windows CE as its own operating system for smaller computing devices, one which has been adopted by major manufacturers such as Hewlett Packard.

Ferrari 'with a Trabant engine'

But Palm president Alan Kessler was confident in the wake of the deal with Nokia: "The No 1 in handheld computing and the No 1 manufacturer of cellular phones have agreed the future platform for voice and data convergence in the (wireless) space."

One analyst said that the link up made good sense for Palm: "Palm has a Ferrari with a Trabant engine. What they are doing is taking the Trabant engine out and getting a Ferrari one with the Symbian operating system."

The link-up is hugely significant for Psion, whose fortunes are closely tied up with the Epoc operating system and its attempts to become the industry standard in the wireless Internet market.

The launch of Psion's Series 7, which comes with mobile Internet access and targets business clients, has helped Psion's share price bounce back recently.

But the prospect of the deal announced on Wednesday helped its shares soar 34% last week alone.