Security company Finjan Software detected a security vulnerability in Microsoft Hotmail Web-based e-mail service, which Microsoft has since closed.

The new security flaw, known as a cross-site scripting vulnerability, could be used to create an Internet worm that steals e-mail addresses from Hotmail users' accounts, captures credit card numbers or installs Trojan horse programs, Finjan said. The vulnerability exists in the way that Hotmail treats e-mail containing ActiveX controls, which are small, portable pieces of software code that enable programmers to embed sophisticated user interface elements into Web pages for use over a corporate intranet or the Internet. Hotmail content filters do not adequately block e-mail messages containing the controls, Finjan said.

In cross-site scripting attacks, malicious hackers embed attack code in Web pages or HTML e-mail messages. Once executed, cross-site scripting attacks can give attackers access to personal account or financial information or control over a remote machine.

As a result of the Hotmail vulnerability, attackers could run malicious code on the computer of a Hotmail user who opened an e-mail containing the malicious ActiveX control, Finjan said.

By embedding a worm engine in the e-mail and code that would grab the addresses from the Hotmail user's address books, attackers could use the Hotmail vulnerability to make a worm, Finjan said.

A Microsoft spokesman said the company was informed of the problem by Finjan on 8 September and patched the company's Hotmail systems within 24 hours. No Hotmail users were affected by the cross-site scripting vulnerability, which no longer affects Hotmail users, he said.

Microsoft has faced frequent criticism for security holes in its Hotmail and .NET Passport single sign-on service, which are used by millions of people on the Internet. In July, for example, the company issued an emergency patch for the .NET Passport service after security researchers discovered and publicised a hole in a feature that helps users update their account password.