Microsoft is believed to be developing a Windows Live service that will offer users a virtual hard drive, much in the same way that Google is expected to do with its GDrive offering.

Few details of the Microsoft Live Drive service are available, but it is anticipated that the software giant is planning to use server farms to deliver online storage services for movies, music and personal data.

Live Drive is expected to be pitched as a "digital safe deposit", allowing for secure back ups of sensitive information.

Google let slip plans for a hosted storage service last month when it inadvertently published part of a PowerPoint presentation for financial analysts.

The presentation mentioned Google's desire to host all user data such as files, emails, bookmarks and pictures on its servers rather than the user saving the information locally.