As reported by I.T. Vibe last week here, Microsoft have issued an advisory on the subject.
Microsoft Security Advisory (919637) announces that Microsoft are investigating reports of "limited “zero-day” attacks using a vulnerability in Microsoft Word XP and Microsoft Word 2003"
According to the advisory the exploit can only be carried out if the user opens a malicious word document provided to them by means including being sent it as an email attachment.
Microsoft is currently working on a fix for this exploit, scheduled to be part of the June security updates or sooner if required.
The official Microsoft release advises opening word documents in "Safe Mode", it also recommends that you do not open or save Microsoft Word files that you receive from un-trusted or that are received unexpected from trusted sources. This vulnerability could be exploited when a user opens a file.
The full advisory is available here: http://www.microsoft.com/technet/security/advisory/919637.mspx
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