Hackers have broken into Microsoft's computer network and may have stolen blueprints to the latest versions of the company's Windows and Office software.

Microsoft confirmed the electronic break-in late last night and said they were working with police and the FBI to investigate. They believe the episode was "industrial espionage".

Rick Miller, a spokesman for Microsoft, would not confirm whether the hackers may have accessed any of Microsoft's "source code", the blueprints for such products as the Windows operating system.

But he said there was no evidence that any source code for Windows, or other commercial software, had been modified or corrupted in the incident.

Mr Miller said: "We're still looking into it. We're still trying to figure out how it happened."

He added: ""This is a deplorable act of industrial espionage and we will work to protect our intellectual property."

Security employees discovered on Wednesday that passwords used to transfer the source code behind Microsoft's software were being sent from the company's computer network in Redmond, Washington, to an email account in St. Petersburg, Russia.

A source quoted in the Wall Street Journal said that it appeared the hackers accessed Microsoft's system by emailing software, called QAZ Trojan, to the company's network. They then used this to open a "back door" through the infected computer.

In hacking terms, a "trojan" is similar to the trojan horse of Greek mythology. It looks like a normal attachment in an email, such as a word document or picture, but contains a hidden code that can take limited control of the recipient's computer.

Once inside, the hacker software can be used to deliver passwords from one computer to another or even to destroy files.

The identities of the hackers are unknown. They are believed to have had access to the software codes for three months.

In order to make sure that the hackers cannot use any stolen source code, Microsoft may now have to change commercial software used internationally by businesses, governments and consumers. The risk of this is said to be remote, although the firm have admitted they are not certain of the hackers' motives.

The FBI have so far declined to comment on the incident.

Useful links
Microsoft underground - ZDNet
Tackling Trojan - PC Hell
FBI computer protection squad
Cry hackerdom - FEED magazine
Feds' crusade - ZDNet