Twitter failed to buy Instagram for $525 million weeks before Facebook snapped-up the photo-sharing app for $1 billion, according to a report.

Unnamed sources have told the New York Times that Instagram CEO Kevin Systrom made a verbal agreement to sell his company to Twitter in March but then pulled out of the deal. Facebook completed its purchase in April.

Reports of Twitter's offer are contrary to a testimony Systrom gave under oath to the California Corporations Department (CCD) in August that the company had not received any other offers.

The CCD was investigating whether Facebook's acquisition of the photo-sharing service was in the best interest of Instagram investors, with Systrom assuring that the company had no other formal offers.

But several people close to Twitter and Facebook, and documents reviewed by The New York Times, seem to contradict the statements.

"Mr. Systrom and Mike Krieger, the other founder of Instagram, held several meetings as late as March with top Twitter executives, according to people on both sides of the talks, who requested anonymity because the talks were private and because they were concerned about legal repercussions. These people said the sides had verbally agreed weeks earlier on a price for Instagram of $525 million in cash and Twitter shares," the New York Times said.

Instagram boasts over 100 million registered users, allowing them to take photographs with their smartphones, add filters to the images and share them instantly on Twitter and Facebook. Both Twitter and Facebook have been instrumental in the apps success, however, relations between Twitter, Instagram and Facebook have soured since Facebook successfully swooped for the photo service.

At the beginning of December, Instagram shut off a functionality which made its images appear badly aligned on Twitter, forcing users to click-through to the Instagram site to view them. Twitter retaliated by introducing photo-filters to its own mobile app in direct competition with Instagram.

There is no indication that the CCD will investigate Instagram over the allegations and the regulator has said that it is yet to receive a complaint over the deal with Facebook.