Microsoft has launched a new version of Hotmail, with the software giant declaring war on what it calls 'greymail'.

Cloud-based email is becoming increasingly popular and there is now major competition from the likes of Google's Gmail for a market traditionally dominated by Hotmail.

Mindful of that, Microsoft's latest update brings smart newsletter filtering, categories and advanced folder management, scheduled cleanup, a new flagging system and instant actions when you hover a mouse over a mail item.

Spam plus

"In previous posts on our blog, we talked about how we've reduced true spam in the Inbox to under three per cent using SmartScreen filtering," blogged Dick Craddock, group program manager, Hotmail.

"But we realised that getting rid of true spam wasn't enough, because 75% of the email people reported as spam are really legitimate newsletters, offers, or notifications that you don't want any more.

"We call this unwanted email graymail, and we're excited to announce five powerful tools to help our customers take control of their inbox, get rid of graymail, and keep track of the important mail in their inbox."

The primary tool in this is smart newsletter filtering, which allows users to highlight and delete newsletters with a single click or unsubscribe completely, while categories and folder management, along with 'flags done right', are all about organising your inbox.

Scheduled anything tends to be a bit of a pain, but new Hotmail brings a cleanup that allows you to get rid of emails of a certain age whilst the interesting looking instant actions are buttons that allow you to delete, flag or sweep with one click.