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The upgraded webmail service succeeds the hugely popular MSN Hotmail and is designed to be safer and more powerful.

While most users are likely, as before, to access Hotmail via a Web browser, the new version also provides support for Windows Mobile devices such as mobile phones and PDAs and desktop email clients.

Later this month users will be able to access Hotmail using Microsoft Office Outlook 2003 or Office Outlook 2007 via a new Office Outlook Connector beta that will provide full contact, email and email folder synchronisation.

Hotmail will also be compatible with the forthcoming beta release of Windows Live Mail, the successor to Outlook Express for Windows Vista.

The Hotmail interface has been redesigned to mimic the look and feel of the desktop Outlook software, says Microsoft, with right-click and drag-and-drop capabilities, preview pane customisation and auto-complete addressing.

Windows Live Messenger (the successor to MSN Messenger) presence is built in, so users can see from their inbox

The interface can be customised, with a 'classic' option for those who prefer the familiar look of MSN Hotmail to the new Outlook-inspired theme.

Microsoft said that improved security has been one of the main requests in user feedback, hence the introduction of the Safety Bar. When an email message arrives in the inbox, the safety bar at the top of each message reports on the outcome of several automatic checks: white indicates the email is from a known sender, yellow indicates the email is from an unknown sender and red indicates the email is potentially fraudulent.

With one click on the 'mark as unsafe' link, customers can automatically delete junk email messages, block any future email messages from that junk email sender and report the junk email sender to Microsoft's spam filters.

'We're thrilled to deliver Windows Live Hotmail to the more than 280 million active MSN Hotmail accounts around the world,' said Steve Berkowitz, senior vice president of the Online Services Group at Microsoft. 'Windows Live Hotmail represents an extremely compelling end-to-end email experience that makes it easy for customers to get best-of-breed email access across PCs, mobile devices and the Web.

Berkowitz added that Windows Live Hotmail will be a critical part of Microsoft's online advertising business 'because email is a key point of influence for consumer purchases'.

New and upgrading Hotmail users will initially get 2GB of storage capacity, but Microsoft plans to gradually increase that, much like Google does with Gmail.