Microsoft has announced plans to launch an improved version of its Internet Explorer (IE) web browser, designed to counter the explosion of security threats on the internet.

The move, announced by Bill Gates, the software giant's founder and chairman is likely to be interpreted as an implicit admission that Microsoft is concerned by the threat posed by "opensource" alternatives to IE.

"Browsing is a point of vulnerability," Mr Gates said at the RSA computer security conference in San Francisco, conceding that IE is regarded by many as a weak point in home computer systems.

Firefox, the opensource browser developed by the non-profit Mozilla Foundation, which is available as a free download, has started to bite into IE's dominant market position, partly because it is regarded as safer.

Since Firefox's release IE has slipped from around 96 per cent of the browser market to about 90 per cent, according to industry estimates.

Providing Mr Gates with much more to think about, Google last month hired Ben Goodger, the head software engineer behind Firefox. The move fuelled speculation that the internet advertising company plans to go head-to-head with Microsoft in the browser market.

The next version of IE will incorporate more stringent security features to help fend off threats such as "phishing," along with viruses and spyware, Mr Gates said.

A test version of the browser - version 7.0 - will be available this summer and it will be incorporated in the next version of Windows, which currently has the code name Longhorn and is expected to reach the market next year.

Phishing attackers use fraudulent e-mails to obtain confidential information from victims by impersonating banks and other companies. As the dominant operating system, used on around 90 per cent of PCs, Microsoft’s Windows is the main target of malicious software attacks.

Mr Gates said that phishing remained a "serious problem". Combating it would require consumer education as well as collaboration from government and the police, he added.

"Security remains a top priority for Microsoft," Mr Gates said, noting that it accounts for one third of Microsoft’s $6 billion annual research and development budget.

"Technology’s full potential can be realised only when customers are able to securely deploy solutions, and the entire community works in partnership to foil attacks by hackers and criminals," he said.

A series of high profile attacks, such as the MyDoom virus which was estimated to have cost business more than $250 million (£130m) a year ago, has boosted the market for security software. Seeing Microsoft’s entry into the antivirus software market as inevitable, security companies and observers on Wall Street have been waiting for details on Microsoft’s plans in the area.

Mr Gates said that Microsoft would deliver a broad antivirus product to consumers by the end of the year following its acquisition of Sybari Software, the security software firm, which was announced last week.

At the RSA event, Mr Gates said that Microsoft will also offer Windows users free software to battle so-called spyware and plans a paid version of the product for business customers.

News of Microsoft’s acquisition of Sybari raised concerns among investors in rivals such as McAfee and Symantec. However, some experts have said that the company could face an uphill battle in convincing customers about the prowess of any anti-virus product.

Nitsan Hargil an analyst at Friedman, Billings, Ramsey, the bank, commented ahead of Mr Gates's announcement that he was unconvinced about Microsoft’s security credentials and that "many customers see Microsoft as the source of several security issues."

Mr Gates, who also serves as chief software architect of the world’s biggest software company, emphasised the company’s commitment to continue developing products to help computer users guard against the threats from malicious software that can compromise privacy and render computers virtually useless.

"Customers are concerned about the risk malware [malicious software] poses to their personal information, and frustrated by its impact on the reliability and performance of their computers," Mr Gates said.

The world’s largest software company early last month rolled out a free test version of the software that removes the unwanted software based on technology from Giant Company, which the software giant acquired in December.

At the time, Microsoft did not say whether it would eventually charge users for the program.

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