As from Tuesday, all of Yahoo's free e-mail accounts will be upgraded to 100 megabytes - a move spurred by Google's plans to offer 1000 megabytes of free storage through its Gmail service.
Until now, Yahoo has only been offering 4 megabytes of free e-mail storage, although some people with accounts opened several years ago have 6 megabytes of free storage.
California-based Yahoo hopes to appeal to e-mailers in other ways, too. It has decided to let people begin signing up for addresses that have been inactive for years.
Yahoo says "tens of millions" of dormant e-mail addresses will be made available again. The company also say it will improve the tools used to search its e-mails - a feature that Google has been touting - and spruce up the service with a cleaner look.
A Google spokesman declined to comment on Yahoo's changes or the company's Gmail service.
Google can't say much about mail or its other products because the company is pursuing an initial public offering of stock, which requires management and other insiders to remain quiet.
Although it's still not available to the general public, Gmail has received widespread publicity since Google unveiled its plans to get into the free e-mail business just a few weeks before the company's IPO filing.
Some people already have been buying restricted invitations to sign up for early Gmail accounts on eBay, with some bids surpassing $60.
Google has been steadily expanding Gmail's reach by allowing existing accountholders to send invitations to friends and family to join the service.
Yahoo operates the most popular free e-mail service on the Web.
The company's e-mail service attracted 39.8 million unique users in April, trailed by Microsoft Corp's Hotmail service at 34.6 million unique users, according to Nielsen Net/Ratings.
The Hotmail service offers only 2 megabytes of free e-mail storage.
During the past three years, Yahoo has been trying to drum up more revenue by selling subscriptions to premium e-mail accounts that offered more storage and other features, such as stronger protection against junk mail.
The company has never disclosed how many subscribers pay for its premium e-mail service.