Fixed in IE9 - see http://msdn.microsoft.com/en-us/library/ff974378%28v=VS.85%29.aspx#_datauri

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drnikki’s picture

drnikki CreditAttribution: drnikki commented

There's also talk aout IE7 and under not supporting Data URIs (http://css-tricks.com/data-uris/), although... does anyone support IE7 anymore?