The company claims the European IT industry will suffer. The Commission shoots back that it is not pursuing a vendetta against the company. The Irish software community and politicians, meanwhile, are trying to stay out of it.

The war of words between Brussels and the company has stepped up in recent days.

Microsoft, which is appealing a 500m fine for breaching EU anti-trust laws levied in 2004, says the Commission has raised competition concerns about its new operating system without specifying what they are.

The company says it has spent some 20bn in development costs on the new operating system and the new version of Office which would quickly follow, and that last-minute demands to change some of Vista's new features, particularly its antivirus security software, could result in the software launching everywhere in the world except the EU.

In that event, the company points to a report it commissioned from technology analysts IDC suggesting that the European software development and training communities could fail to create new jobs.

Adding to the furore, this week US software firms Symantec, which makes antivirus software, and Adobe Systems, the electronic documents firm, will send executives to Brussels to discuss Vista. The Wall Street Journal reported last Thursday that the two companies had asked the European Commission to take action against Vista, claiming that some of its features would undercut their own software.

For her part, Neelie Kroes, the Brussels competition tsar, denied that she was pursuing a "vendetta" against Microsoft in an open letter to the Financial Times last week.

It is the threat that Microsoft may wind up withholding the release of Vista in Europe, and what effects that might have, that will be hotly debated in the coming weeks.

That there could be a further delay was first revealed in August, where in a Form 10K filing to the Securities and Exchange Commission in the US, Microsoft noted "uncertainties about the EU decision could cause Microsoft to modify product design and delay release dates for Windows or other products".

Microsoft claims such a delay will cost Europe jobs.

The company points to a study it commissioned from technology analysts IDC suggesting that the European IT industry could miss out on 50,000 jobs if Vista doesn't launch in Europe at the same time it launches in the rest of the world.

IDC said in its study that Windows Vista would be installed in more than 30m personal computers in the UK, Denmark, Germany, France, Poland and Spain in the first year.

"Windows Vista will precipitate cascading economic benefits, from increased employment in the region and increased taxes to a stronger economic base, " the study found.

Some companies were worried about the threatened delay. "The bulk of our business would be Microsoft led, " said Brian Kinsella of Sure Skills. "Our business is driven by deployment." He said in previous releases of Windows his company has typically sought out companies that would be "early adopters" of the software, offering consultancy services on deployments and training for employees.

"So a delay would be a double whammy for us, " Kinsella said.

Other Irish software companies contacted for this article declined to comment.

Minister for Enterprise, Trade and Employment Micheal Martin, who in the past has expressed concerns about Brussels' regulatory framework on technology companies, was on a trade mission to South Africa and unavailable for comment. A spokeswoman, however, said that the department was unaware of any potential harm to the Irish software industry as a result of any delay of Vista.

Microsoft Windows runs on more than 90% of personal computers worldwide. It is also the key driver of Microsoft's profitability, accounting for 30% of revenues and 60% of earnings for the company.

In her letter to the FT, Kroes of the European Commission denied that she was trying to delay Microsoft's launch and accused the company of engaging in a "coordinated campaign" to discredit her.

The company responded that it wanted assurances its software would be "fully compliant" with the Commission's competition rules.

Microsoft is thought to be the largest single taxpayer in Ireland as it pays taxes on its licensing fees here.

The Irish Software Association said in a statement late Friday: "The ISA believe that new and innovative products which are developed within the EU, by whatever company, should be supported and fostered in line with the Commission's stated objectives.

"In this regard, any difficulties encountered by companies in bringing new products to market in the EU due to the regulation encountered in this sector could stifle innovation and could create a gap between the EU and our competitor economies in the United States and in Asia.

"We believe that it is vital that the European Commission support such product developments to ensure that innovation remains central to the development and success of the EU, and that everything is done to support the competitiveness of Europe and its industries".