Software giant Microsoft yesterday pledged to change its licensing agreements following a seven-year court battle with the US government.

The dramatic step will loosen Microsoft's control over how its operating system is configured for different hardware, allowing manufacturers to remove the Internet Explorer icon from the Windows desktop, an action which previously would have breach Microsoft's trading practices.

"We recognise that some provisions in our existing Windows licence have been ruled improper by the Court, so we are providing computer manufacturers with greater flexibility," said Microsoft CEO Steve Ballmer in a press statement.

Although the US Court of Appeals ruled against an earlier decision that Microsoft should be split, it did uphold allegations of illegal behaviour befitting of a monopoly.

Microsoft said its actions to alter licensing agreements do not take the place of any settlement discussions with the US government.

The changes will come into effect immediately, permitting manufacturers of new machines running Windows XP to pick any browser icon to appear on the desktop.

But Microsoft was quick to stress its decision only affected Internet Explorer, so icons for Windows must remain clearly visible.

But some analysts still believe this is a tiny step and still not enough to give other internet browsers a fair chance.

"It's a little too late for Netscape," Chris Le Tocq analyst at Guernsey research in Los Alto, California, told our News Service. "Why would an OEM remove Internet Explorer when most of their customers expect to do it anyway?"