Andersen is being whittled down as its U.S. offices prepare to withdraw, while layoffs and defections are planned overseas and more U.S. clients abandon the troubled accounting firm.

Rival KPMG is considering acquiring all or parts of Andersen's auditing practices at three more U.S. offices, a KPMG source familiar with the matter said Wednesday. That would be in addition to six others that Andersen officials confirmed earlier this month.

The tentative pacts involve about 150 partners and 2,000 employees in Seattle; Portland, Ore.; Salt Lake City; Boise, Idaho; San Francisco; Los Angeles; Boston; Philadelphia; and Denver, according to the KPMG source, who spoke on condition of anonymity.

KPMG and Andersen officials would not comment on any initial deals.

"Any transaction that we would consider would be consistent with the reforms we've outlined and part of our plan to move forward with the audit firm of the future," said Andersen spokesman Patrick Dorton.

Arthur Bowman, editor of Bowman's Accounting Report, said losing the auditing practices might further erode Andersen's standing in the profession.

"What these deals are doing is putting cash into the firm's hands, which it desperately needs to continue operations, but it also weakens its position as a player in the game," Bowman said.

The Justice Department and Andersen continued to work Wednesday on a possible settlement to a criminal obstruction-of-justice charge. In the indictment, unsealed March 14, the grand jury accused Chicago-based Andersen of wrongfully destroying documents related to the collapse of Enron Corp.

A federal judge has delayed a hearing on whether Andersen can keep selling assets and Andersen's lawyers continue talks on settling civil fraud claims.

In Houston, U.S. District Judge Melinda Harmon delayed a Wednesday hearing over a group of insurers' request to block Andersen from selling assets to allow settlement negotiations to continue unfettered.

Harmon said in an order filed late Tuesday that "great harm could be caused by holding the hearing on April 17, before the conclusion of ongoing settlement negotiations." The hearing was rescheduled for April 24.

Talks to settle civil fraud claims against Andersen continued Wednesday at the New York offices of Andersen's attorneys, Davis Polk & Wardwell, said sources familiar with the negotiations who spoke on condition of anonymity.

The firm's operations continue to shrink as more companies have decided to drop Andersen as their auditor and additional layoffs have been planned.

Halliburton Co., Estee Lauder Cos. and News Corp. were among those joining the fast-growing list of big companies dumping Andersen as their auditor. All three announced they had hired KPMG after several decades with Andersen.

Andersen has now lost 220 publicly traded companies this year — nearly 10 percent of its 2001 client base of 2,311 public audit clients, according to Atlanta-based Auditor Trak, which monitors industry data.

Amid Andersen's plan to lay off 7,000 U.S. employees, the British division of Andersen Worldwide announced Wednesday that it was laying off as many as 1,500 employees, or 30 percent of its work force.

Andersen U.K. said the job cuts would be made over the next 90 days. The layoffs are in addition to 200 cuts announced there last week, and come as Andersen UK prepares to combine its operations with Deloitte & Touche UK.

The French unit of Andersen Worldwide said Wednesday that it plans to merge with Ernst & Young France after ending talks with KPMG. Andersen's Spanish affiliate announced earlier this month that it was breaking ranks to link up with Deloitte Touche Tohmatsu.

Andersen's partner groups in Hong Kong and China have said they plan to combine with PricewaterhouseCoopers, while Andersen units in Russia, Australia and New Zealand are arranging to merge with Ernst & Young.