Assistant Attorney General Joel Klein, in his response to Microsoft's alternate plan submitted to the court on Wednesday, said it was ``ineffective and filled with loopholes. It was unable to prevent the company from engaging in many of the illegal acts found by US district judge Thomas Penfield Jackson.''

``Nor would it prevent the company from using its monopoly power in the future to engage in the same kind of illegal behaviour to crush new innovations,'' he added.

Attorney General Tom Miller of Iowa, who leads the states that are joining the federal government in the suit, insisted that the best solution for consumers was a break-up, which Microsoft called a ``draconian'' plan. Under Microsoft's proposed penalty for itself, which would last four years, the company would be compelled to give rivals access to the secret programming codes of the Windows computer operating system while allowing computer makers to hide the Internet Explorer Web browser and alter the Windows desktop.

In addition, the company proposed a timetable that could move court hearings on remedies in the case to as late as December - after the presidential and Congressional polls. After the court found Microsoft guilty of violating anti-trust laws, the government called for splitting Microsoft into one company for Windows and another for handling applications, Internet businesses and other products and services.

Microsoft chairman Bill Gates said, ``Even without the extreme break-up proposal, many elements of the government's proposed regulations are unwarranted, outside the scope of this case and very damaging to consumers.'' The company, in its filing, said it ``respectfully disagrees with the court's conclusion that Microsoft has violated the anti-trust laws'' and accused government attorneys of overreaching.

The court found the company violated federal anti-trust law by using the monopoly power of the Windows operating system to bully rivals in a scheme that harmed consumers by limiting innovation and inflating prices.

The government's position has been strengthened by the Software & Information Industry Association's support for the break-up proposal. Association president Ken Wasch said, ``Microsoft continues to act as if a 77-day trial had never occurred. Flagrant violations of anti-trust law require appropriate remedies.''

According to experts, the court is bound to take into account Microsoft's legal argument against the government-sought break-up and allow time asked for by the company to prepare its defence. Judge Thomas Penfield Jackson has scheduled a hearing for May 24 when he will comment on the Microsoft plan intended to avoid its break-up. He is also expected to outline further proceedings.

``The government's main argument for a break-up is that we cannot trust Microsoft - that it has squeezed out competitors in the past and it will continue to squeeze out competitors,'' the New York Times quoted Eleanor Fox of New York University Law School as saying.