Hackers are targeting an unpatched bug in Internet Explorer that could leave a user's PC under their control, warns Microsoft.

"We have also been made aware of proof of concept code and malicious software targeting the reported vulnerability," Microsoft said in an update posted to its website Tuesday.

The problem in question has been a matter of public knowledge since May, but it was not considered to be a serious issue until last week, when British security firm Computer Terrorism published "proof of concept" code showing how hackers could exploit the problem and possibly take over a Windows system.

The bug concerns the way IE processes the "Window()" function in JavaScript, a popular scripting language used by web developers to make their sites more dynamic.

Microsoft's Windows Live Safety Center is now able to detect and remove the malicious software.

The Live Safety Center scans for a program called TrojanDownloader:Win32/Delf.DH, which exploits the bug. "There are no readily apparent indications that your computer is infected by TrojanDownloader:Win32/Delf.DH. However, the presence of a file named KVG.exe or keks.exe in your Startup folder may be a symptom of infection by this Trojan," Microsoft saidin a statement on its website

The vulnerability affects users on Windows XP, Windows, 2000 and Windows 98, Microsoft said. "Customers who are running Windows Server 2003 and Windows Server 2003 Service Pack 1 in their default configurations, with the Enhanced Security Configuration turned on, are not affected," the advisory states.

Attackers would first need to trick users into clicking on a web link to launch the malicious code. But once that was done, it could set up a chain of events that could ultimately let a hacker gain control of the user's system.

To avoid the problem, the SANS Internet Storm Center has advised users to turn off JavaScript, which can be done by disabling "Active scripting" in Internet Explorer's Internet Options menu, or to use an alternative browser like Firefox or Opera.

Microsoft executives were not available for comment on this matter, and a spokeswoman with the company's public relations agency declined to comment further on the malicious software reported in Microsoft's advisory or to say when the company planned to fix the problem. "Microsoft is still investigating this vulnerability," she wrote in an e-mail.

That response didn't sit well with one security expert. "This issue is a damning one for Microsoft's commitment to security," said Russ Cooper, editor of the NTBugtraq newslist and a scientist with security vendor Cybertrust. "They have known about the module which contained the flaw since May this year. At the very least, that module should have been fixed even if not released to the public."

"The result is that we are taught, yet again, that if you want to get a vendor's attention to a flaw in their product you need to create an exploit and publish it," he said. "Just telling them is not sufficient."

Microsoft's security advisory criticises Computer Terrorism for doing just that. "Microsoft is concerned that this new report of a vulnerability in Internet Explorer was not disclosed responsibly, potentially putting computer users at risk," the advisory states. "We believe the commonly accepted practice of reporting vulnerabilities directly to a vendor serves everyone's best interests."

Security vendor Sophos has not yet seen attackers exploiting this code, said Sophos Senior Technology Consultant Graham Cluley. This suggests that Microsoft may wait until its next scheduled security update on 13 December to fix the problem, rather than rushing out a patch immediately, he said. "If someone has just posted something up on few Web sites, then they probably wouldn't bother. But if there is something actively spreading, then they probably would do it," he said. "I think they're probably loath to issue an update out of the cycle."