Microsoft’s August Internet Explorer security update has introduced a critical security bug, according to researchers at eEye Digital Security.

Microsoft released the security patch, known as MS06-042 on August 8, but users soon reported several problems with the software.

Patched browsers would crash when using Web-based versions of several applications, including PeopleSoft, Siebel, and Sage CRM. Web sites that used HTTP 1.1 compression to speed up the downloading of images could also cause the browser to fail.

Last week, Microsoft released a "hotfix" download that addressed these problems, but the software giant will also take the unusual step of re-releasing the entire MS06-042 update, thus ensuring that all Windows users would automatically receive the updated code.

What Microsoft hasn't told its users, eEye said Tuesday, is that the browser-crashing bug could also be used by attackers to run unauthorised software on a victim's PC.

"What people didn't know about that patch is when [Microsoft] introduced that patch, they actually introduced a new exploitable vulnerability," said eEye chief hacking officer Marc Maiffret. "They basically butchered that patch."

EEye discovered the security problem last week after looking more closely at the crashing problem, but the company believes that the security hole is also known by other security researchers and exploit writers.

"The bad guys basically know about this and know that it's an exploitable scenario," Maiffret said.

Researchers at eEye have created a "proof of concept" exploit for the problem in their labs, but Maiffret did not know of any such code being released to the public. This lessens the likelihood of a widespread attack based on the bug.

Nevertheless, eEye is encouraging IT administrators to apply the revised MS06-042 patch as soon as possible.

The problems with MS06-042 have rekindled an ongoing debate on the subject of responsible disclosure, with eEye faulting Microsoft for not informing customers sooner of the security flaw, and Microsoft saying that eEye's disclosure was done "irresponsibly," according to Tony Chor, a group program manager on the Internet Explorer team.

Microsoft knows of no attackers exploiting the bug at this time, he said.

Microsoft had been planning to re-release the MS06-042 update on Tuesday, but that has now been delayed indefinitely as Microsoft fixes an unspecified problem with the patch, Chor said.