Jackson: 'biased'

But it threw out the remedy - a break-up into two separate companies - because it said media interviews by the previous judge could be seen as showing bias against the company.

District Court Judge Colleen Kollar-Kotelly was appointed by random selection earlier in August, and has ordered the two sides to report by 14 September on what issues remain outstanding.

The DoJ has also said that it had dropped further action on its complaint about the web browser being tied into Windows.

The fact that Microsoft unfairly tied its Internet Explorer web browser into the Windows operation system was the original complaint of the DoJ.

Speeding it up

The DoJ is trying to streamline the case with the goal of securing an effective remedy as quickly as possible.

It's hardly a surprise that the Bush/Ashcroft Justice Department has flip-flopped and is no longer seeking an effective remedy against Microsoft

Scott Harshbarger, consumer lobbyist

The U-turn on strategy was not completely unexpected.

During testimony in Congress the attorney-general, John Ashcroft, hedged when questioned by senators about the government's commitment to pursuing the lawsuit against Microsoft, saying that many issues needed reviewing.

Mr Ashcroft's department now says the government "believes it has established a basis for relief that would end Microsoft's unlawful conduct, prevent its recurrence and open the operating-systems market to competition."

Threat to Windows XP?

The DoJ will ask the court for a period of discovery to investigate developments in the industry since the trial concluded, and evaluate whether additional conduct-related provisions are necessary.

The decade-long, multimillion-dollar, competitor-driven persecution of Microsoft is rapidly coming to a pertinent conclusion

American Conservative Union

And it has already confirmed that it will seek to stop Microsoft from making certain exclusive deals with partners.

It will also try to force computer manufacturers to keep specific icons and programmes on the Windows desktop.

The proposed restrictions could have a large impact on the Microsoft's latest software, Windows XP, according to Howard University law professor Andy Gavil.

Windows XP is due to be launched in October.

"It's hard to square the interim remedy with Windows XP," Mr Gavil said.

"All of these little things really have to do with how XP is being prepared and marketed."

Mr Gavil said the Justice Department's action means the case could move more quickly and is more palatable to Bush appointees.

"Rather than fight the battle over breakup, get down to the brass tacks over how we can change their conduct now in a way that will preserve some competition in the marketplace," he said.

"It is probably more philosophically agreeable to the administration."

Opinion divided

The Department of Justice decision has divided opinion in the US.

It's been clear for some time that the structural remedy to Microsoft's anticompetitive behavior would not be put into effect

John Buckley, AOL

Scott Harshbarger, of consumer lobby group Common Cause, said: "It's hardly a surprise that the Bush/Ashcroft Justice Department has flip-flopped and is no longer seeking an effective remedy against Microsoft.

"Microsoft put their bets on this horse and now it is time to collect their winnings ...

"This company performed an illegal operation but they will not be shut down.

"Nor, evidently, will they face any penalty likely to deter them from anticompetitive, predatory, and monopolistic behavior in the future."

But the American Conservative Union hailed the decision as a saving of taxpayer's money.

"The decade-long, multimillion-dollar, competitor-driven persecution of Microsoft is rapidly coming to a pertinent conclusion," said ACU chairman David Keene.

John Buckley, of Microsoft competitor AOL, said: "It's been clear for some time that the structural remedy to Microsoft's anticompetitive behavior would not be put into effect.

"What's clear today is that the Department of Justice is prepared to take a hard look at Windows XP and will pursue a quickly imposed remedy to open up competition on the desktop."