Microsoft Corp. (NASDAQ:MSFT) will release a patch for Windows XP next week that will allow users more choices in their browser, e-mail, instant messenger and media player, according to reports Friday.

The patch will represent the first product changes the company has made as part of its proposed anti-trust settlement reached with the Department of Justice in November. Nine states are challenging the judgment in court, leaving the settlement pending.

The Windows XP Service Pack, set for release to 10,000 beta testers next week, will be widely available for free download in August in a 40-megabyte patch, the Wall Street Journal reported. The service pack will address some of the anti-competitive charges that were made against the Redmond, Wash. software giant. It will give manufacturers more choices between Microsoft and non-Microsoft products, allowing them more options to use third-party software.

The heart of the anti-trust case against Microsoft was the company's practice of bundling its many programs with its ubiquitous Windows operating system. The government charged the practice put rival programs, such as the Netscape browser, at a severe competitive disadvantage against Microsoft products. The new patch does not un-bundle Microsoft programs, but it does give computer manufacturers and users more options about which programs are used.

For example, a new start menu button called "set program access and defaults" will allow users four choices: computer-maker's settings; Microsoft only; non-Microsoft only; and customized. The default choice is customized.

The new options could help computer manufacturers, who can now choose third-party middleware, as well as rival manufacturers of Microsoft products like AOL Time Warner and RealNetworks.

Another change is the patch will stop Passport from prompting users until they have visited Hotmail, MSN, or another Microsoft site or program requiring Passport's personal-identification system.

Between now and the general release, Microsoft plans to open its code to other software companies, allowing them to write their programs to work seamlessly with Windows XP.

The service pack will also roll together a variety of security patches issues by Microsoft since XP's release in October.

Microsoft still has to deal with the case brought by the states, which want more restrictive penalties against the company. Judge Colleen Kollar-Kotelly will hear closing arguments in the case on June 19.

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