The first malicious codes to exploit security flaws in Microsoft Windows' handling of jpeg image files has appeared on internet newsgroups.

The trojan is embedded in Jpegs that, once downloaded and viewed, allow hackers to gain control of the user's PC.

Microsoft acknowledged the vulnerability and issued a security patch earlier this month but at the time no viruses exploiting the flaw had been seen.

Online newsgroup access provider Easynews found the trojan code in pictures posted to its site earlier this week.

The current situation poses little risk of a major virus attack because the code cannot replicate itself and spread.

But a more serious way to exploit the flaw has also been posted on Bugtraq, a site that tracks and reports flaws in major software products. According to security software provider Finjan, the new method would allow the hacker to take over an end user's PC simply by having them browse a web page that contains the malformed image file using Internet Explorer.

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