According to LiveSide.Net, Windows Life Office, which is the online version of Microsoft Office, is going to support version feature which is going to take the online collaboration to different level. This feature will come along with Live Wave version 4. This is what is quoted :
Here’s what an internal Microsoft document says about this new feature of Windows Live Office:
Versioning
With multiple edited versions of the same document, you can always go back to previous versions thanks to the online file management provided by Windows Live SkyDrive — another key part of transforming Hotmail and Office into a great personal productivity solution.
(Remember that Windows Live Office is built on top of SkyDrive, much like Windows Live Photos currently is.)
I have used Office Web Apps along with Sharepoint 2010 and the user interface might be similar to what looks in the screenshot below.
