Oracle's chief Larry Ellison, the world's second richest man, has defended the decision to spy on Microsoft, the company run by the world's richest man, Bill Gates.

Mr Ellison admitted hiring private detectives to gain evidence of what it says is Microsoft's funding of public interest groups.

Mr Ellison said he had no regrets.

"It is absolutely true that we set out to expose Microsoft's covert activities," he said. "If Microsoft is creating front organisations, I feel very good about bringing that information to the public."

I think this is a remarkable black eye for Oracle.

Mark Murray, Microsoft

Oracle's aim was to discredit the campaign it says was bankrolled by Microsoft to persuade the government to drop its anti-trust case.

Microsoft is battling with the US government over plans to break-up the company because of violation of anti-trust laws.

If Microsoft is creating front organisations, I feel very good about bringing that information to the public.

Larry Ellison, Oracle

The detective agency hired by Oracle, Investigative Group International, reportedly tried to obtain documents from the Association for Competitive Technology, a pro-Microsoft group, by paying staff who cleaned the group's Washington office.

Mr Ellison said he had never heard of the detective agency, and said it should be the job of the press to expose Microsoft's misdeeds.

"Microsoft is special," he said. "They are the ones who destroyed the most innovative company in Silicon Valley."

And the head of the detective agency hired by Oracle, Terry Lenzer, said that his company "abides by a rigorous code of professional ethics and conducts all of its investigations in a lawful manner."

Microsoft hits back

Microsoft said that Mr Ellison's admission was "dramatic evidence that Microsoft's competitors have engaged in a massive and ongoing campaign to unfairly tarnish Microsoft's public image."

"I think this is a remarkable black eye for Oracle," added Microsoft spokesman Mark Murray.

"The only thing more disturbing than Oracle's behaviour is their ongoing attempt to justify these actions."

Alleged Oracle Front Organisations

Progress & Freedom Foundation Software and Information Industry Association Computer and Communications Industry Association ProComp

Microsoft alleged that Oracle had itself funded a number of anti-Microsoft industry groups, including the Progress and Freedom Foundation, the Software and Information Industry Association, and the Computer and Communications Industry Association.

The row is part of the increasingly bitter battle between the world's two richest men - Bill Gates of Microsoft and Larry Ellison, whose personal worth has been approaching that of Mr Gates as the value of Microsoft shares has fallen during the court case.

It also gives some indication of the growing lobbying activities by the high technology industry in Washington.

And it has embarrassed some of the leading newspapers in the United States - including the Washington Post, the New York Times, and the Wall Street Journal - which had published the original allegations.

Front organisations

Oracle says it succeeded in proving that a newspaper advertisement from a group called the Independent Institute with 240 academic signatures opposing the government's anti-trust activities had actually been paid for by Microsoft.

Alleged Microsoft Front Organisations

Association for Competitive Technology Independent Institute National Taxpayers Union Citizens for a Sound Economy

It also leaked details of Microsoft's funding of the National Taxpayers Union - which claimed that the court case was undermining the value of state pension funds - to the Wall Street Journal newspaper.

But it denied involvement in the exposure of Microsoft's support for a free-market lobbying group called Citizens for a Sound Economy, which recently reported that laptops containing damaging information were stolen from its offices.

Oracle said its aim was to expose the "underhanded" methods Microsoft used to try and influence public opinion.

Dirty tricks

But Jonathan Zack, president of the Association for Competitive Technology, called the investigation "despicable" and said he was considering legal action.

"This is bribery. It's also a security issue," he said.

David Theroux, president of the Independent Institute, said that "anybody who stoops to whatever was done here, cannot be trusted".

"Oracle has apparently felt the need to employ back-alley tactics, subterfuge, and disinformation in order to achieve its aims," he added.

Both Mr Theroux, and Mr Berthoud, of the National Taxpayers Union, said they had advocated free market policies well before the Microsoft case, although they did admit receiving funds from the company.

Microsoft has been criticised for employing Ralph Reed, the former head of the Christian Coalition and an advisor to George Bush, as one of its lobbyists.

The computer industry is split down the middle over support for Microsoft, with many hardware makers backing the company's campaign against the government, while many rival software firms are calling for a break-up.