AOL Time Warner has distanced itself from a deal announced last week which will see its Netscape 7.0 browser installed as the default Web software in the Lindows.com operating system, calling the announcement "misleading".

Lindows.com's chief executive, Michael Robertson, said at the time that the company was targeting households with multiple AOL users who might want to "purchase their own 'AOL computer'". Lindows.com, like other "alternative" operating systems such as Mandrake Linux, is installed on inexpensive PCs from retailer Wal-Mart, which cost under $200 (about £128).

An AOL Time Warner spokesman said that it had "nothing to do with" Lindows.com's PC plans, explaining that the company had simply filled out a one-page form on Netscape.com to obtain a license to distribute the Netscape browser software.

"Lindows.com is one of more than 70,000 organizations that have signed up for Netscape's free Browser Distribution Program (for) those who wish to distribute Netscape (not AOL)," the spokesman said. "Other than that, there is no relationship whatsoever between AOL and Lindows and we're actually quite surprised by their misleading announcement."

The spokesman said that AOL had spoken with Lindows.com about the announcement.

Last week, Lindows.com said it had licensed the Netscape 7.0 software from AOL, saying that PCs running Lindows 2.0 would be "out-of-the-box ready for those people to connect to their AOL mail, AOL Instant Messenger and Chat capabilities using Netscape."

The company also said last week that its engineers had "worked with AOL Time Warner engineers to customize Netscape 7.0 for bundling with LindowsOS." Lindows also says it is working on customizing the Windows version of the AOL 7.0 client for Lindows, using Windows-emulation technology.

Lindows is based on Linux, an open-source variation of the Unix operating system. Although Linux's impact is apparent in the server market, it is considered far too complex for consumer desktop PCs. Lindows is hoping to change that perception. Lindows was originally billed as a non-Microsoft operating system that would run many popular Windows applications, but the company later backed away from that claim.

The Netscape technology is also available on Windows, Macintosh and other Linux operating systems. It allows users to connect to some AOL features, such as mail and instant messaging, but cannot access the AOL service itself. Some AOL features, such as the AOL Web site, are available through any Web browser.

However, Lindows emphasized last week that the AOL brand would be a draw for many PC buyers. "For 35 million people, AOL is 'the' Internet," Robertson said at the time.

Lindows.com did not immediately respond to requests for comment.

News.com's Sandeep Junnarkar contributed to this report.