AN FRANCISCO, June 26 — Microsoft said today that it had agreed to make changes in a children's version of its Passport authorization software after an advertising industry watchdog group challenged the service over issues of parental control and privacy.

The company, based in Redmond, Wash., has promoted Passport as a convenience feature that would permit computer users to sign on only once to use multiple Web sites and online services.

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But critics have said Passport could potentially be used to collect personal information on consumers and have suggested that the company might try to sell the information for marketing purposes. Microsoft has responded that it has established stringent privacy guidelines to protect the user information.

The group, the Children's Advertising Review Unit of the Better Business Bureau, said today that it had begun investigating the Passport service earlier this year.

Officials of the group said today that Microsoft had said that use of the Kids Passport service would help protect children's safety and privacy online and had given the impression that sites and services accessible as part of the service were "children's sites." The agency, however, said it had discovered that there were no special privacy-protection provisions taken and that the sites were actually general consumer sites used by people of all ages.

One of the group's concerns, officials said, was that many of the Microsoft Kids Passport sites in fact offered chat rooms and other public forums that were designed to allow users to communicate and exchange information like names, e-mail addresses and phone numbers.

As a result of the group's investigation, Microsoft has made a number of changes, including no longer representing the Kids Passport service as aiding parents in protecting online privacy; noting that the Kids Passport service sites are not designed specifically for children; posting a specific children's privacy statement for its Passport service; and agreeing to revise its MSN Statement of Privacy to inform parents of how its MSN service collects and discloses children's personal information.

Although the Children's Advertising Review Unit was originally created by the advertising industry to combat deceptive advertising practices, the agency has broadened its scope as a result of the emergence of interactive technologies like the World Wide Web.

"In the offline world there was a chance for mediation, and the parent could say no to an advertiser," said Elizabeth Lascoutx, director of the review unit. "But when the child was sitting at a keyboard it became a real issue."

A Microsoft executive said today that the company had been working with the group to bring its software into compliance with the group's Self-Regulatory Guidelines for Children's Advertising.

"They identified a bunch of places where we could do better, and we think that's great," said Adam Sohn, Microsoft product manager for .Net strategy, a software service that includes Passport. "We entered into a productive dialogue and we're pretty pleased we could come to this agreement."

Microsoft never intended to mislead anyone, he said.