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Its new Windows Live SkyDrive replace the Live Folders service and provides 500MB of free storage, to which users can add files by simply dragging and dropping within a browser.

Files can be added and accessed anywhere from a PC or a Mac, including other users' files that have been placed in a shared or public folder. Users can set the access permissions for each folder created on the SkyDrive: contents of public folders can be viewed but not edited by all while shared folders allow password-protected read-write access to a designated group.

All file transfers are protected using SSL.

Windows Live SkyDrive beta is a free service at skydrive.live.com.

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week Apple expanded its Mac-only .Mac service from 1GB to 10GB of storage, covering email, web hosting and the iDisk virtual hard drive. Google has long been rumoured to be preparing a similar online repository - popularly known as Gdrive and internally said to be code-named Platypus. However for the time being it is content to offer large capacities to Gmail and Docs & Spreadsheets users, and like Apple, sells additional capacity.

BT has even got in on the act, with the Digital Vault service that offers 1GB of free space or 20GB for £4.99 per month.

UPDATE: Google has begun bumping Gmail account capacities to more than 9GB. Mashable reports that "some Gmail users have seen their storage bumped to over 9GB today - 9030MB, to be exact. If not a glitch (and why would it be?), it means Google is playing catch-up with Yahoo, which now provides unlimited storage."