The enhancement provides an alert when cookies arrive and allows people to reject and delete cookies implanted by third-party Web sites, the company said in a statement.
The update for Internet Explorer 5.5 is being released in "beta," or test, form to more than 2,000 customers, Microsoft said. A public beta is expected to be available in four weeks. IE 5.5 was launched last week.
Cookies, digital identifying tags that can track consumer purchases and travels on the Web, have long been criticized by privacy experts who fear the data that cookies track could end up in the wrong hands.
Microsoft said it decided to release the update after consumers voiced concerns about cookies, after conversations it had with privacy advocacy groups, and after meetings with state attorneys general at the National Association of Attorneys General gathering in Seattle last month.
Only a week old, IE 5.5 has already been the center of controversy. Last week, Web standards advocates complained that proprietary technology used in IE 5.5 will lead to the creation of Web pages that won't work with browsers from Netscape Communications, Opera Software and other providers. In addition, a well-known software bug hunter said the new browser included a security hole that would let an attacker read files on a target's computer.