The announcement came just a day after AOL said it would start offering its e-mail and multimedia services to broadband users for free, as part of a drive to compete better with Yahoo and Google.

What was once the Internet's dominant player had only just announced 1,300 layoffs in May, mainly at its customer call-centers, as it vies to shore up its dwindling market share.

"It's likely that within six months, 5,000 employees will no longer be with the company any more," AOL spokeswoman Tricia Primrose Wallace said.

The company employs some 19,000 people around the world, primarily in the United States, including about 3,500 employees in Europe.

The spokeswoman declined to elaborate on a webcast announcement made to staff by AOL chief executive Jonathan Miller, saying more would be known in September.

But she said the job cuts are "100 percent aligned with the strategy AOL announced on Wednesday," and that the company is focused "on growing our audience and on growing the advertising part of our business."

Users have been deserting AOL's fee-paying service for dial-up Internet access. More than three million users dropped the service in the quarter to June, abandoning AOL's snail-paced access speeds in favour of broadband.

Time Warner said Wednesday that as a result, AOL's subscription revenues from fixed-line Internet access had plummeted 11 percent in the quarter from a year ago.

AOL also announced that it had entered into exclusive talks with French telecoms group Neuf Cegetel to sell its French Internet interests by the end of the year.

AOL's French operations include about 500,000 broadband subscribers and about the same number of dial-up users. The company employs some 500 workers at a Marseille call-center in southern France.

AOL said it would continue to offer its dial-up subscription service, "but will no longer aggressively market it."

Rivals Yahoo, Google and Microsoft's MSN offer free e-mail and content in a bid to entice users to their portals to maximise their advertising revenues, a strategy AOL now aims to emulate.

It is manoeuvring to become the leading portal for a range of Internet services, including instant messaging, classified ads, paid searches and multimedia entertainment.

AOL, formerly known as America Online, is a shadow of its former self. Just a few years ago, it was an Internet colossus and the driving force of the 2000-2001 mega-merger with Time Warner.

In the years since, however, it has weathered an accounting scandal and been relegated to one of the many divisions in Time Warner's sprawling media, film, publishing and entertainment empire.

Time Warner's stock closed down two cents at 16.65 dollars. Its stock has shed over a dollar since the start of the year.

The entertainment group has been fending off pressure from billionaire corporate raider Carl Icahn to overhaul its entire business, particularly the AOL division.

Icahn was aghast last December when Google announced it was taking a five-percent stake in AOL for one billion dollars.

The deal entrenched an advertising alliance between the Internet competitors, but the wealthy financier argued that AOL would have been better off financially by joining up with Yahoo or Microsoft.

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