The Internet giant is to spread its online empire even further by creating an auction Web site with Sotheby's which began life, ironically as a book auction house, in London in 1744.

Amazon.com is challenging the Internet's leading online auctioneer eBay

Now Sotheby's is an international company, with main offices in New York and London, listed on the New York Stock Exchange, while Amazon.com is one of the biggest Internet success stories.

The new web site, at www.sothebys.amazon.com, will put under the virtual hammer collectables such as coins, stamps, fashion and dolls as well as more general art works and antiques. The 10-year deal is worth £28m and the new site will be open for business later this year.

Guaranteeing authenticity

Founder and chief executive of Amazon.com Jeff Bezos said: "In the world of valuable objects a big problem has been authenticity. Who better to help solve that problem than Sotheby's?"

President and chief executive of Sotheby's Diana D Brooks added: "Amazon.com brings us the best online technology, the most superb customer service and the largest number of e-commerce customers in the world. We could not ask for a better Internet partner."

Online auctions have boomed over the last six months with many of the major Internet companies announcing auction services.

The Sotheby's deal heats up the battle between Amazon.com and the Internet's leading online auctioneer, eBay.

In April, eBay said it was buying a smaller, San Francisco auction house Butterfield & Butterfield Auctioneers for about $260m.

The Amazon.com partnership moves Sotheby's further into cyberspace.

Plans are already in the pipeline to launch Sotheby's own Web auction site, sothebys.com this autumn.

Following that announcement, rival Christie's International quickly announced plans to auction artwork, jewellery and collectibles Online.