Microsoft has unveiled an initiative which it hopes will reduce the €2.5bn bill which businesses pay for lost productivity due to spam.

The software giant will focus on developing better technology, and encouraging industry self-regulation, legislation and enforcement.

"Spam is one of the most serious problems facing customers today and we have a responsibility as an industry leader to help people address the issue and restore confidence and utility in email," said Jean-Philippe Courtois, president and chief executive at Microsoft EMEA.

"We firmly believe that this problem requires a co-ordinated approach that includes technology, industry self-regulation, strong legislation and targeted enforcement against illegal spammers."

Phil Jones, assistant commissioner of the UK Information Commission, welcomed the initiative.

"The Information Commissioner strongly supports industry initiatives of this kind," he said.

"Although legislation has a vital part to play, not least in reinforcing acceptable norms, the volumes involved, together with the jurisdictional problems, mean that this scourge will not be stopped by formal enforcement alone."

By partnering with industry, and working with government and law enforcement agencies, Microsoft aims to play its part in turning the tide of illegal and unwanted email.

According to Microsoft, spam now accounts for more than half of all email traffic and costs European companies more than €2.5bn in lost productivity in 2002.

The European Internet Service Providers Association (EuroISPA), also welcomed the initiative.

Louisa Gosling, president of the association, said: "EuroISPA campaigned hard to ensure that the European Union's legal framework clearly outlaws spam.

"However, this cannot apply to spam originating outside the EU, which figures show is on the increase.

"Co-operation between industry and governments to tackle the problem of spam is vital and initiatives such as this are extremely welcome news."