Yahoo has rejected Microsoft's latest attempt to persuade the company to sell up.

Microsoft chief executive Steve Ballmer had warned Yahoo that he would lobby stockholders to elect a new board of directors if the current board failed to accept a deal.

Yahoo sent a written response to last week's letter from Ballmer, stating that the board's view of the proposal had not changed.

"We continue to believe that your proposal is not in the best interests of Yahoo and our stockholders," read the statement.

"Contrary to statements in your letter, stockholders representing a significant portion of our outstanding shares have indicated to us that your proposal substantially undervalues Yahoo."

Microsoft proposed a stock deal worth $44bn to buy Yahoo in late January. Yahoo rejected the offer less than two weeks later, saying that the proposed deal greatly undervalued the firm.

Yahoo said at the time that it would not entirely rule out a deal with Microsoft if the company were to make a better offer. The board reiterated that point in its latest statement.

"Our board carefully considered your unsolicited proposal, unanimously concluded that it was not in the best interests of Yahoo and our stockholders, and rejected it publicly on 11 February 2008," read the letter.

"At the same time, we have continued to make clear that we are not opposed to a transaction with Microsoft if it is in the best interests of our stockholders. "

Later in the letter, Yahoo's tone grew harsher and more critical of Ballmer and the three-week deadline he had laid down.

"We consider your threat to commence an unsolicited offer and proxy contest to displace our independent board members to be counterproductive and inconsistent with your stated objective of a friendly transaction," Yahoo stated.

"We are confident that our stockholders understand that our independent board is best positioned to objectively and knowledgeably evaluate our company's alternatives and to maximise value."