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Social networking site Facebook is considering adding Microsoft to its friends list, according to a report.

Microsoft is currently in talks to buy a stake of up to five per cent in Facebook, the Wall Street Journal has claimed.

The newspaper reports that the software giant could purchase such a stake for between $300 million (£149 million) and $500 million (£249 million).

It says that Facebook would be valued at as much as $10 billion (£5 billion) as a result.

But Microsoft could reportedly face competition from Google in seeking to buy into the growing popularity of Facebook, with the internet search provider also interested in making such an investment, the Journal adds.

Microsoft already shares some history with Facebook, as its exclusive provider of banner advertising and sponsored links to the site.

However it is claimed that the site's 23-year-old founder and chief executive, Mark Zuckerberg, might hold out for a deal which values Facebook as high as $15 billion (£7.5 billion). He is said to be considering raising up to $500 million (£249 million) to expand the site's operations.

Securing a stake in Facebook would give Microsoft access to around 40 million people who currently use the social networking site.

Two years ago Rupert Murdoch's News Corporation snapped up rival site MySpace in a bid to tap into the increasing popularity of such platforms, while Yahoo is rumoured to be in talks to buy another site, Bebo.

Analysts have said that securing a stake in Facebook would prove beneficial to Microsoft.

"It would probably be pretty good for Microsoft since it has not had the best success in creating really hip, young-people-grabbing stuff on the web," said Fort Pitt Capital analyst Kim Caughey, in comments reported by the Reuters news agency.