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Moving the 20-strong operation into the Perspectives Isleworth headquarters follows a split with Direct Car Finance, its biggest client, and comes just short of the deadline for renewing the lease on its West End offices.

Nick Kerr, the managing director of Red Cell in London, claimed that linking with Perspectives was one of a number of options being considered.

But he insisted: "No move has been agreed and no final decision has been made."

But industry sources say putting the lacklustre London office with the successful Perspectives is a "short-term fix", which will give the WPP-owned Red Cell time to negotiate the acquisition of another London agency.

One option would be for Sir Martin Sorrell, WPP's group chief executive, to broker a merger between Red Cell in London and HHCL & Partners. The agency is owned by Chime, in which Sorrell has a substantial stake.

Chime declined to comment on the merger speculation surrounding Red Cell, which is also known to have sounded out DFGW, Mother, Walsh Trott Chick Smith and Mortimer Whittaker O'Sullivan about a possible deal.

WPP set up Red Cell last year, linking the former Conquest European network with Singapore's Batey Advertising and Seattle's Cole & Weber. More recently it acquired the New York hotshop Berlin Cameron, which is said to have increased the pressure on Red Cell to establish a credible London operation.