US states are considering launching a fresh lawsuit against Microsoft, following criticism that the firm's latest computer operating system, Windows XP, could shut out competitors.

Microsoft has been sued before for violating anti-trust laws, by a coalition of several US states and the US Department of Justice.

A federal judge found Microsoft guilty of anti-competitive behaviour and ordered the company to be broken up. The case is currently being reviewed by a federal appeals court.

Richard Blumenthal, Connecticut attorney general, and Tom Miller, Iowa attorney general, said they had particular reservations about Microsoft's plans to bundle new features into its Windows XP software.

"Microsoft seems to be using much of its power to preclude competition on a new platform," said Mr Miller, who helped lead the 19 states in the current antitrust suit.

Windows XP's features were cited as the key reason for the breakdown of negotiations between AOL Time Warner and Microsoft over an alliance.

Not imminent

Although they said they were not ready to launch an imminent suit, it does remain an option.

Plans to bundle Windows XP with products such as Instant Messaging have aroused concern

"We haven't reached a point where we're discussing it publicly," Mr Blumenthal said.

"We have been exploring strategies, consulting experts, doing legal research. Generally preparing."

Another option is to bring up their latest concerns in the current case if it is sent back by the appeals court to the lower court for a new ruling.

Premature

Microsoft has dismissed talk of further litigation as premature and pointed out that most of the products being criticised are not yet on the market.

Windows XP is due for launch in October, and is intended to enhance the company's new internet initiatives.

The company reiterated that it was not looking to monopolise the market, adding that consumers would be free to decide whether to use the products.

Current lawsuit

Last year, US District Judge Thomas Penfield Jackson ordered Microsoft to be broken in two for anti-trust violations.

He said the company had unfairly tied its Windows operating system to its Explorer web browser in order to establish a monopoly on software.

The company has appealed to a higher court and is expecting a judgement in days.

Chief executive Steve Ballmer admitted this week that the company had made no contingency plans to deal with a potential break-up.

Vermont meeting

The various states' legal officials are meeting this week in Vermont at their annual conference and will discuss the possibility of a second lawsuit.

A group backed by Microsoft's rivals, including Oracle, Sun Microsystems and Netscape, a subsidiary of AOL Time Warner, made a presentation on Wednesday to further persuade them.

Mr Blumenthal has also said that they would be ready to pursue their case against Microsoft even if the Justice Department, now under President George W. Bush, seeks a settlement.