The flaw lies in the way IE7 processes a locally stored HTML error message page that is typically shown when the user cancels the loading of a Web page, said Aviv Raff, a security researcher based in Israel.
The error message tells the user that "navigation to the Web page was canceled," and offers the user the opportunity to "refresh the page." If the refresh link is clicked, IE can be tricked into displaying the wrong Web address for a page. Raff has published proof of concept code that shows how IE can be made to display a Web page on his Web site as if it is from the cnn.com domain.
This flaw could be exploited by phishers who want to make their spoofed Web sites appear legitimate, Raff said.
"I can inject a script that will display anything I want in the page when the user clicks the 'refresh' link," he said via instant message. "Combining this with the design flaw, an attacker can render in the browser whatever he wants with whatever URL he wants in the address bar."
This type of bug is known as a cross-site scripting vulnerability. It affects IE 7 on Vista and Windows XP, Raff added.
Microsoft could not immediately confirm Raff's findings, but the company issued a statement saying that it is investigating the issue and is "not aware of any attacks attempting to use the reported vulnerability or of customer impact at this time."