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Software giant Microsoft has seen off competition from internet search engine Google to snap up a stake in social networking site Facebook.

The company is to buy a 1.6 per cent stake in the popular website for $240 million (£117 million), in a deal which values Facebook at around $15 billion (£7.3 billion).

News of the deal comes after the Wall Street Journal reported last month that Microsoft was considering buying a stake in the popular website for a price that would value the portal at around $10 billion (£4.8 billion), but that its young founder might hold out for a better deal.

In a statement Microsoft confirmed that under the deal agreed by the two companies it will be the exclusive third-party seller of advertising for Facebook, both at an international level and in the US.

The terms of the deal build upon Facebook's existing relationship with Microsoft, which already provides banner advertising and sponsored links to the site. Commenting on the agreement Facebook's chief revenue officer, Owen Van Natta, said: "We are pleased to take our Microsoft partnership to the next level.

"We think this expanded relationship will allow Facebook to continue to innovate and grow as a technology leader and major player in social computing, as well as bring relevant advertising to nearly 50 million active users of Facebook."

The president of Microsoft's platforms and services division, Kevin Johnson, added: "Making this investment and expanding this partnership will position Microsoft and Facebook to better take advantage of advertising opportunities around the world, and is a great win not only for our two companies, but also our collective users and advertisers."

However some analysts have suggested that Microsoft has paid too high a price to be added to Facebook's list of friends, stressing that the company is gambling on the hope that the social networking site will be able to develop into a hub for a range of internet applications.

Facebook chief executive Mark Zuckerberg, 23, founded the website in his Harvard University dorm room less than four years ago.