EBay plans initially to pay $1.3 billion in cash and $1.3 billion in stock, and to make a further payout of up to $1.5 billion by 2008 or 2009 if financial targets are met, giving the deal a total value of up to $4.1 billion, the source said.

Spokesmen for eBay and Skype declined to comment. The eBay investor relations site contains a notice of a conference call scheduled to be held at 8:00 a.m. EDT (1200 GMT) on Monday but provided no details on the nature of the call.

Skype, whose software allows consumers to make free or low-cost phone calls anywhere in the world via the Internet, would be the biggest merger so far for 10-year old eBay.

It tops the $1.5 billion eBay paid in 2002 for PayPal, which thrust eBay into the lead in the online-payment market. This year PayPal is on track to become a $1 billion business.

Skype, which is based in Luxembourg, offers a free service when calling other Skype users. Charges apply when Skype users connect to traditional land-based telephones.