Microsoft agreed to support other browsers on its operating system
The European Union has voiced its approval for Microsoft's latest pledges to curb its anti-competitive practices.
The technology giant has agreed to give customers a wider choice of web browser through its Windows operating system and to share information with rivals.
The EU will now consult PC makers, software firms and consumers on Microsoft's offer.
The breakthrough could see an end to the anti-trust battle that has lasted for the best part of a decade.
"The commission will formally market test proposals made by Microsoft to address concerns regarding the tying of Internet Explorer to the Windows PC operating system," said the EU's competition commissioner Neelie Kroes.
"The preliminary view is that Microsoft's commitments would indeed address our concerns," she added.
"PC users should have an effective and unbiased choice between Internet Explorer and competing web browsers."
In 2004, the EU ruled that Microsoft had abused its dominant market position by freezing out rivals.
It said Microsoft must let competitors' products run on its operating system.
In July, Microsoft proposed a consumer choice screen that allowed users to pick from a number of different browsers.
The commission then asked Microsoft to improve the choice screen, which it has now done.
The latest proposal, and the one which the EU is consulting on, features a choice of 12 browsers.
The proposal also relates to exchanging information with other software companies.
It will "ensure that developers throughout the industry will have access to technical documentation to assist them in building products that work well with [our] products," Microsoft said in a statement.
"Today's decision is a significant step toward closing a decade-long chapter in competition law concerns in Europe," it added.
Back in 2004, the EU fined Microsoft and forced it to offer a version of its Windows operating system without Microsoft's own media player.
The company was also told to give rivals more information about how Windows works, so they could make their own software integrate better with the operating system.
Microsoft appealed against the decision but lost its case in 2007.