Yahoo co-founder and chief executive Jerry Yang has announced that he will step down and return to the role of 'chief Yahoo' at the search company.

Yang helped start the firm 14 years ago and took on the top job in June 2007 at the board's request. He will remain on the board and will complete the move only when a successor has been appointed.

"When the board asked me to become chief executive and lead the transformation of the company, I did so because it was important to re-envision the business for a different era to drive more effective growth," said Yang.

"Having set Yahoo on a new, more open path, the time is right for me to transition the chief executive role and our global talent to a new leader."

The news has rekindled speculation that Microsoft might once again attempt to snap up the company as it tried to do earlier this year in a bid to tackle Google's dominance in the search engine market.

Since the original offer, Yahoo has been besieged by job cuts, a plummeting share price and a failed advertising deal with Google.

Yahoo stock currently trades at around $10.63, but if there is any truth in the rumours it is extremely unlikely that a bid will come anywhere near the $31 a share originally offered by Microsoft.

Yahoo chairman Roy Bostock has enlisted the help of executive search firm Heidrick & Struggles to search inside and outside Yahoo to find the next person to lead the company.

"Jerry and the board have had an ongoing dialogue about succession timing, and we all agree that now is the right time to make the transition to a new CEO who can take the company to the next level," he said.