Microsoft has said it will update its digital rights software following the release of a free software program that strips out the control code and makes files easily shareable.

The FairUse4WM application can be used to remove protection from the latest versions of Microsoft's digital file software, Windows Media DRM 10 and 11. In response, Microsoft has said it will update its Windows Media DRM system to "address the circumvention".

"Microsoft has long stated that no DRM system is impervious to circumvention - a position our content partners are aware of as well," the company said in a statement. "That is why we designed the Windows Media DRM system to be renewable, so that if such events occur the system can be refreshed to address them."

FairUse4WM appeared on 19 August on the site, an online forum for people who want to convert DVDs to digital media files they can save on a computer hard drive. A user called "viodentia" created the program to "enable fair-use rights to purchased media", according to a posting on the site.

The existence of FairUse4WM could have serious consequences for Microsoft, which is competing with Apple and other companies to provide all the software and services necessary to support purchasing and playing of various digital content via computers and other devices. DRM technology, which protects the copyright holders of digital media but is less popular with users because it limits their ability to copy and share files protected by DRM, is a major component of that strategy.

FairUse4WM lets users who download music on subscription services that provide files protected by Windows Media DRM - such as MTV Networks' Urge or Napster - to remove the DRM protection and so play them even without a subscription.

Digital music subscription services typically work by letting a user play an unlimited amount of music files as long as they pay to subscribe to the service. Without the subscription, they can't play the files. It's likely that Microsoft's digital content partners would frown upon the idea that users could play Windows Media DRM-protected files from their services without paying for those files.