Google is set to launch its own Web browser with some insiders claiming that the Company is also looking at developing a Google operating system to replace Windows.

According to the Wall Street Journal the browser will be called Google Chrome and is designed to deliver enhanced address-bar features and new capabilities not found on other web browsers. The product will be open-sourced so that partners developing additional capability for the browser can easily write new code.

WSJ claims that news of the project spread after an unconventional leak. Google Blogoscoped, a blog that follows the company, reported Monday that Google had sent it a comic book outlining the specifications of the browser – which include a new format for “tabs” and the ability to view Web pages as thumbnails.

While the new browser will go head to head with Microsof’t’s Internet Explorer it could well create problems for the Mozilla Foundation, the organisation that builds the free Firefox browser. Last week Google renewed their agreement to partner with the Foundation which was set to expire in November, extending it until 2011.

While there has been speculation for years that Google has been working on a browser some say that the Company is keen to develop a Google OS that will be given away free to PC and device builders as long as Google can stream advertising to the device via the OS. They have also explored the concept of  thbird party applications being streamed to the new OS in the same way that iPhone users can access applications. U&sers will pay an annual fee in installments for the applications or a short term pay as you use fee.

Google has been working on the product for about two years, according to one person familiar with the matter. Work became more serious when Microsoft launched Internet Explorer 7, according to one person familiar with the project. Google grew concerned that the browser would make it easier for Microsoft to route users to Microsoft’s search service, which could hurt Google’s market share.

See www.wsj.com for more on this story.