Fourth Estate, a bastion of the independent publishing sector, with acclaimed authors such as Annie Proulx and Carol Shields, is poised to fall into the hands of the HarperCollins group.

Guardian Media Group, publisher of the Guardian newspaper, is in advanced negotiations to sell its 42% controlling stake in Fourth Estate to the transatlantic corporation owned by Rupert Murdoch, sources say.

None of the three parties involved was willing to comment on or confirm the negotiations. But well placed sources say that a formal agreement could be signed within days.

Literary agents have already been told to make joint submissions both to HarperCollins Publishers in Britain and the small but successful Fourth Estate, which is also based in London.

There are reports that letters have already been prepared to authors explaining the impact of the pending deal.

Victoria Barnsley, the charismatic managing director of Fourth Estate, who founded the company in 1984, is expected to take the post of chief executive at HarperCollins Publishers. This position has been vacant since Eddie Bell retired last year.

Fourth Estate made its reputation as a publisher of high quality fiction and non-fiction, including the prize-winning Longitude by Dava Sobel.

But Ms Barnsley and editorial director Christopher Potter have been keen to expand the company by breaking into the American market and by moving into more popular areas, including romantic fiction.

They are also struggling to compete as a small group in a world where bigger and bigger advances are being made to best-selling authors.

Ms Barnsley and Janet Friedman, head of HarperCollins US in New York originally started talking about a joint venture in North America. But the demise of Fourth Estate as an independent publisher would leave the field to a dwindling band of British companies, led by Bloomsbury, producer of the Harry Potter books, and Faber & Faber.

There could also be some political fallout. Fourth Estate is the publisher of successful biographers such as Francis Wheen who has made clear in the past that he is no fan of Mr Murdoch.

And there could also be a question mark over a project just commissioned from another celebrated biographer, Michael Crick. He is writing a book on Mr Murdoch.

Critics of the US-based media magnate point to the row over Chris Patten's book about his time as governor of Hong Kong. HarperCollins dropped the deal amid allegations that Mr Murdoch's growing business relations with China could be harmed.

There are fears among the 35 staff at the Fourth Estate offices in Notting Hill that they would be dwarfed by HarperCollins. They are worried that the number of new titles could be cut back and that there could be redundancies.

HarperCollins employs more than 1,000 people at various locations including Hammersmith, west London. Last year Fourth Estate published 95 new titles while HarperCollins produced 1,300.

The small independent produced an operating profit of £270,000 on sales of £7.3m. HarperCollins turned in an operating profit of £6.4m on sales of £124m.