The judge in the contempt case that could result in a $1m daily fine against Microsoft has rejected the company's demand for the removal of one of his computer advisers.

Federal Judge Thomas Penfield Jackson sharply questioned the company on Wednesday and described its challenge of a Harvard law professor as "trivial" and "defamatory."

Microsoft claims Windows 95 does not work properly without Internet Explorer

Microsoft is defending itself against charges by the US Government that it defied an order by Judge Jackson to remove the Internet browser, Internet Explorer, from its Windows 95 operating system.

The company, based at Redmond, Washington, says it is complying with the injunction but has found that removing the browser means the operating system does not work properly.

During a dramatic day at the US District Court in Washington DC, Judge Jackson had a tense exchange with Microsoft executive David Cole, challenging his claim that the firm was forced to offer a non-functioning version of Windows 95 to comply with the order.

Bill Gates: "Windows 95 will not work without Internet Explorer"

Microsoft claims that Internet Explorer is a part of the Windows 95 operating system - not a programme it can easily strip out.

Mr Cole said he and other executives, including chairman Bill Gates, met several times to discuss the order, made on December 11. They decided to give computer makers a choice between selling a non-working version of Windows 95 or continuing to sell it with the browser.

Later, Judge Jackson rejected Microsoft's charges that his computer adviser, Lawrence Lessig, had shown bias against the company and might reasonably be perceived to be "a partisan of Netscape" - a bitter rival of Microsoft in the market for Internet Web browsers.

Judge Jackson said Prof Lessig had assured him of his own impartiality.

Netscape cuts 15% of workforce

The Justice Department argues that Microsoft's inclusion of the browser in Windows 95, loaded on 90% of new personal computers, gives it an unfair edge over rivals like Netscape.

But Mr Cole told the hearing "it would not be possible" to remove the browser from the latest version of Windows 95 - known as OSR 2.5 - using a built-in "add/remove" utility without degrading the operating system, as the Justice Department has suggested.

Closing arguments will be made in the hearing on January 22, after which Judge Jackson will make a ruling.

On the same day, Netscape announced plans to cut its workforce by 15% after projecting a fourth quarter loss blamed on intense competition from Microsoft.

Japan's Fair Trade Commission (FTC) also launched an investigation into Microsoft's division in that country for suspected infringement of anti-competition laws.

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