Talks have not been scheduled, however, and it appears that the differences between the two sides remain considerable.
"We are willing to talk on a wide range of issues as long as our ability to add features to our products and innovate are protected," said a source close to Microsoft. "This is nothing new. We've always stated that we would have discussions with the government."
Justice Department antitrust division chief Joel Klein, who is attending a high-technology conference in Scottsdale, Arizona, said that the government was open to negotiations.
"We have not received any settlement proposal from Microsoft," Klein said, adding that the department was "open to a settlement" that met all of the government's requirements.
The Justice Department and 19 states allege that Microsoft is a monopolist that has illegally used its dominance to crush competitors. A key allegation is that Microsoft bundled its Internet Explorer browser with its Windows operating system to thwart Netscape Communications.
Settlement talks last May failed after the government demanded Microsoft either separate the two, or bundle Netscape's Navigator browser as well.
Before the trial recessed last month, U.S. District Judge Thomas Penfield Jackson advised both sides to use the six-week period to their advantage, presumably to explore settling.
The trial is scheduled to resume on April 12, but could be delayed even further by proceedings in a separate trial Jackson is presiding over. A longer than expected recess would allow the government and Microsoft additional time to explore common ground.
Any decisions concerning settlement would be made by Microsoft chief executive Bill Gates in consultation with top members of his legal team, the source close to Microsoft said.
Reuters contributed to this story.