If they come to an agreement, they could come close to fulfilling the dream of US mobile phone users: coast-to-coast coverage.

Vodafone is strong in the West of the United States, following its take-over of US operator Airtouch earlier this year.

National network

Bell, meanwhile, is strong on the Eastern seaboard.

The mobile phone market in the US is highly fragmented, and even though phone users can 'roam' across the country, they often have to pay high charges when using other networks.

An alliance would be a swift route to creating the national network both Vodafone and Bell Atlantic are seeking.

A Vodafone spokesman said: "Discussions with Bell Atlantic are continuing, but there can be no assurance that any agreement will be reached."

Vodafone said it was reviewing a number of options for developing its US operation, including the tie-up with Bell Atlantic.

A deal with Bell Atlantic would give Vodafone access to more than 20m US customers.

Complications

The two companies were involved in a bidding war over Airtouch, with Bell Atlantic hoping that a take-over would give it a chance to build a coast-to-coast network.

Vodafone outbid Bell Atlantic, offering £40bn ($66.5bn) to secure Airtouch.

Analysts say the proposed link-up could be complicated by Bell Atlantic's pending acquisition of telecoms firm GTE.

Bell Atlantic and GTE have been told to divest certain wireless assets before they can merge, and that may have to be sorted out before any deal is done with Vodafone.