C&W launched the cross-border takeover battle, unprecedented in Japan, last month with a 62.4 billion yen ($321 million) bid. The raised offer--the third--now values IDC at 69bn yen ($356 million).

"We are positive about winning this. We will fight," a spokeswoman for the UK's second largest phone firm said.

C&W is hungry for a slice of the world's second largest telecoms market and says it would make IDC a key hub in its global business network.

Graham Wallace, chief executive at the British firm, was in Japan last month to meet with IDC's shareholders and government officials.

The contested bid is unusual in Japanese corporate history and has triggered warnings from the UK that a successful takeover by NTT would raise competition andregulatory issues.

C&W is keen to point out that NTT is controlled by the Japanese government and says the bid battle is a test case for Japan's willingness to deregulate its markets.

Added urgency to its efforts to enter the Japanese market came with the unveiling in April of British Telecommunications and US-based global partner AT&T's plan to take stakes worth a total $1.85 billion in Japan Telecom.

Meanwhile NTT, the former state monopoly, wants the deal because it would give it a strong start in the international market, which it will enter for the first time next month under deregulation of the telecoms industry.

NTT's latest offer, put to the board of IDC on Tuesday, was for 68 bilion yen.

The British bidder, as one of the founding shareholders in IDC, is directly informed by the board of any new bid from its rival.

The escalating takeover battle has created an increasingly murky picture for IDC shareholders. "The situation is so fluid that we cannot decide at this time whether to accept anew offer from C&W," said a Toyota spokesman.

Toyota, along with trading company Itochu and C&W, is a major shareholder of IDC, each owning a 17.7 per cent stake.

But the series of small incremental rises in the offers has puzzled analysts. "NTT may not be particularly serious about buying IDC," suggested Nikko Salomon Smith Barney analyst Makio Inui.

Inui said the price tag so far put on IDC already exceeds its fair value. Some analysts have calculated it is worth 40 billion yen. Its current market capitalisation is 31.2 billion yen.

The offer from NTT was enough to push the firm's stock price up 3 per cent in Tokyo, before C&W's latest bid was unveiled. C&W has given shareholders until June 15 to decide on its offer.