Cable operator NTL, which recently purchase Cablelink, has become the clear frontrunner in the £8 billion battle for Cable & Wireless Communications' British residential network as it entered exclusive talks with the group.

NTL, a British company listed on the Nasdaq market in the US, has struck a deal giving it exclusive rights on talks with Cable & Wireless, the telecoms operator which has a controlling interest in CWC.

Telewest was formerly the favourite to buy the telephony and television cable interests, but lengthy negotiations have come to little.

The exclusivity period, which will protect NTL from rival approaches from Telewest or other interested parties, has been set for 12 months, a source close to the deal said.

The source added: "I think this can be taken as a sign of confidence that both sides think they can do the deal best without a gladiatorial contest."

An agreement is hoped for in the next few days.

NTL's offer reportedly includes a mixture of cash and shares in the combined group.

It was lodged after France Telecom last week invested $1 billion (£613.5 million) on a 10 per cent stake in NTL.

If the NTL bid succeeds, the French group is thought to be prepared to pump a further $4 billion into the company.

Telewest chief executive Mr Tony Illsley said: "Naturally, we are disappointed by Cable & Wireless' decision. We continue to believe that Telewest represents the best merger partner for CWC's cable interests."

Telewest would monitor the situation closely, he added.

Cable & Wireless, which owns 53 per cent of CWC, is keen for a quick deal.

It has already seen its share price suffer as a result of the prolonged auction process for its One2One mobile phone joint venture.

Telewest is thought to have argued that its bid, also in cash and shares, is superior to NTL's because CWC's shareholders will continue with a stake in a British FTSE-100 Index-listed company.

NTL will consider seeking a London listing if its bid succeeded.

CWC's independent directors, who would have to clear any takeover or merger, confirmed they would consider proposals from bidders for the business.

While they would be obliged to consider all offers on behalf of shareholders, the views of Cable & Wireless would be the major influence on their decision.

Telewest shares closed down 11 3/4p at 293 3/4p, Cable & Wireless gained 12p to 827p and CWC fell 6 1/2 p to 725p.

NTL gained 2 per cent in the US, up $2.0624 to $104 the early afternoon.