The lay-offs are a result of the decision to offer its email and multimedia services for free to broadband users announced on Wednesday.

Tricia Primrose Wallace, a spokeswoman for the Internet service provider, owned by Time Warner, said on Thursday that the job cuts were "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".

The cuts were announced to staff by Jonathan Miller, the chief executive, via a webcast on Thursday morning.

No further details were given of where exactly the jobs would be lost. The company employs around 19,000 people worldwide, mainly in the US.

Jumping ship

AOL, once the dominant global Internet presence, has lost three million users of its fee-paying Internet dial-up service in the quarter to June.

Time Warner said on Wednesday that as a result, AOL's subscription revenues from fixed-line Internet access had fallen by 11% in the quarter since last year.

AOL’s chief rivals Yahoo, Google and Microsoft's MSN all offer free e-mail and content in a bid to attract users to their portals and maximise their advertising revenues.

AOL now aims to emulate that strategy, although it said it would continue to offer its dial-up subscription service "but will no longer aggressively market it".

The company also announced that it expected to reach deals to sell its European Internet access businesses that employ about 3,000 people by the autumn.

European sale

AOL said it had entered into exclusive talks with the French telecoms group, Neuf Cegetel, to sell its French Internet interests. Sources have said the deal would be worth around $384.1million.

Sources have also said that AOL is in discussions in Britain with a round of bidders including BSkyB, Carphone Warehouse, and France Telecom's Orange unit to sell its access business in Britain.

Bidders for AOL's German unit include Versatel, freenet.de, United Internet, Telecom Italia, and KPN, several sources close to the sale process have said.

Other employees affected by the restructuring are likely to be workers who market the Internet service business and customer service representatives, said one source with knowledge of the plans.