However, the update won't offer any of the features touted by Microsoft at Mobile World Congress, which took place in Barcelona last week, such as a mobile version of Internet Explorer and copy and paste. Instead, the update "is designed to improve the software update process itself".
"Now, before you get too excited, let me explain: This isn't the update you've probably been reading about or perhaps waiting for, the one with copy and paste (but that's coming soon)," said Microsoft's Michael Stroh in a blog.
"While it might not sound exciting, it's [the update] still important because it's paving the way for all future goodie-filled updates to your phone, such as copy and paste or improved Marketplace search."
To install the update, Windows Phone 7 users will need to connect their handset to a PC and use either the Zune software for your PC or the Windows Phone 7 Connector for Mac.
However, Stroh warned that users that have installed the Zune software or the Windows Phone 7 Connector in the past, might actually need to update that program first and then use it to update your phone.
"This update is a relatively small one. Still, it's our first - the first of many," he said.
Stroh did not offer a specific date for the release of the copy and paste update. Last week, Microsoft CEO Steve Ballmer said it would be rolled out "in just a few weeks in early March".