The company's new management team also said it might take further accounting revisions after investigations by the US Securities and Exchange Commission and its own auditors were complete.

Richard Notebaert, the company's chief executive officer, said an initial review had revealed "errors" in the way the company had accounted for transactions dating back to the beginning of 1999.

Joseph Nacchio, the company's former CEO, was forced out last month partly as a result of concerns that had built up over the company's accounting.

Qwest is the latest in a series of US telecoms company to come under scrutiny. WorldCom's alleged $3.8bn accounting fraud has left the company close to bankruptcy, while Global Crossing was forced to seek protection from its creditors with a filing under Chapter 11 of the US bankruptcy code this year.

Until now Qwest has been under scrutiny over its accounting for so-called swap transactions under which it sold network capacity for the same companies that it bought from.

Yesterday's disclosure, however, showed that the company had booked hundreds of millions of dollars of revenue at the end of its quarterly reporting periods which should have been delayed until the next quarter.

Like many telecoms and technology companies over the past two years, Qwest was under intense pressure to meet quarterly revenue and earnings targets in the face of a collapse in demand for its services.

According to Mr Notebaert, some transactions that were completed at the end of a quarter were accounted for immediately, even though the contracts were not signed for and payment was not received until the following quarter. Qwest's normal accounting policies did not allow such a treatment, he added.

Mr Notebaert refused to comment on whether the accounting errors represented an attempt to meet quarterly targets.

Qwest and its new auditors have yet to decide whether the company should also restate more than $1bn of revenues from swap transactions.

Those deals had been accounted for properly under the company's earlier accounting policies, said Mr Notebaert.

However, he added that KPMG had yet to express an opinion on those transactions, and that the company might need to restate them.

Qwest is trying to sell assets before the end of this year to meet debt repayments and avoid a default and yesterday's revelation could make it more difficult for the company to avoid bankruptcy.

The company said it is withdrawing its financial guidance for the full year 2002 and will report its results for the second quarter on August 8.