Security experts are notifying users about the first self-propagating virus to take advantage of a widespread vulnerability reported last month in Windows.

Known by various names, including Blaster and Lovesan, the worm virus has begun to infect computers at homes and businesses. It could clog the Internet with traffic and allow a malicious hacker to steal or corrupt data stored in an infected system, experts said.

The vulnerability, a buffer overrun in a Windows interface that handles the RPC (Remote Procedure Call) protocol, was acknowledged by Microsoft in a security bulletin posted 16 July. Along with government and private security organisations, Microsoft has been urging customers to install a security patch in order to protect against attack.

The flaw affects several versions of Windows, including Windows NT 4.0, Windows XP and Windows Server 2003, making potential targets of millions of desktop and server computers. Experts have warned of the potential for serious disruption of the Internet, although it wasn't immediately clear Monday how rapidly the worm was spreading.

Security vendor Trend Micro Inc. said it had received reports of several infected machines Monday. The worm was observed scanning for vulnerable systems and then sending itself to those machines using port 135, the company said. The worm will also launch a denial of service attack against Microsoft's windowsupdate.com Web site on 16 August and 31 August and on every day from 1 September through the end of the year, Trend Micro said.

Trend Micro gave the worm an overall risk rating of medium but rated the damage and distribution potential as high. Network Associates' McAfee unit also rated the worm "medium on watch" for both home and business users.

Netsolve, an IT services company in Austin, Texas, that provides managed security services to about 1,000 businesses, said the worm was spreading rapidly and had been observed in several of its customers' networks Monday afternoon. However, Chuck Adams, the company's chief security officer, said it was too early to say for sure how much damage, and what type of damage, the worm will cause.

"The impact is pretty small right now, but based on the analysis we've done on the (exploit) code we've captured, it's going to be a propagation pattern similar to SQL Slammer," he said, referring to a widespread worm that affected Microsoft's SQL Server 2000 database earlier this year.

However, based on Netsolve's early observations, Blaster isn't likely to spread as widely as SQL Slammer, Adams predicted.

"I don't think it will be as large because there are some limitations," he said. For example, SQL Slammer tried to take advantage of multiple Windows vulnerabilities, while Blaster appears to exploit only one, he said.

The most troubling aspect of Blaster is that as well as propagating itself, the worm installs a "back door" program on infected systems and reports back to an Internet relay chat server that the system has been compromised, Adams said. A malicious hacker could use that information to identify a compromised system and then attempt to delete or access data stored on it, he said.