The slashing of 20 per cent of its work force comes on top of 5,000 jobs cut a year ago, as AOL tried to boost traffic to its ad-supported websites by giving away aol.Com e-mail accounts reserved for paying subscribers.

"This realignment will allow us to increase investment in high-growth areas of the company - as an example, we added hundreds of people this year through acquisitions — while scaling back in areas with less growth potential or those that aren`t core to our business," AOL chief executive Randy Falco told employees in a memo.

The cuts affect about 1,200 jobs in the United States, including 750 in AOL''s headquarters Northern Virginia, and about 800 overseas. AOL now plans to move its headquarters to New York to be closer to the media advertising industry.

The company cut 5,000 jobs little more than a year ago, when it first announced plans to move away from life as a subscription-based ISP. The reductions were mostly in customer-service and marketing personnel as AOL opted to stop producing and distributing its famous trial discs aimed to luring new customers to its internet access subscriptions.

The latest round of cuts beginning today will continue over "the next couple months."

In recent months, AOL has acquired companies like AdTech, Third Screen Media, and Tacoda to beef up its online advertising capability.