A Nottingham-based security company claims Chinese crackers had disabled Windows XP's anti-piracy system within a few hours of the product's launch.

BitArts Labs' chief technology officer, John Safa, said that crackers have developed illegal installation files that bypass the registration process for Microsoft's new operating system.

"These files can now be downloaded from websites in the Far East and cracked copies of Windows XP, with the protection mechanism stripped out, can be downloaded from Warez sites across the internet," Safa said.

Safa added that his company warned Microsoft about its flawed anti-piracy system when it tested the product during its beta phase. The Redmond giant said the problems it highlighted would be fixed in the final version.

"But it wasn't, and now crackers have studied and bypassed the security by using publicly available monitoring tools," Safa said.

He dubbed Microsoft as naive for underestimating the high level of technical intellect within today's cracking community.

"If they'd taken our advice, they really wouldn't be having these problems," Safa said.

While Microsoft was right to introduce licence activation, it needed to adopt a much better approach. The design of many software companies' activation technologies - and this includes Microsoft - provide no barrier to today's advanced cracking techniques.

"Companies must learn to understand cracking ideologies or they will be consistently caught out. The industry is educated in the art of hacking, but the elusive world of cracking allows the inner workings of applications to be reversed and modified," Safa said.