  We have measured the cross section $\sigma(e^+e^-\to\pi^+\pi^-\gamma)$ with
the KLOE detector at DA$\Phi$NE, at an energy $W=M_\phi=1.02$ GeV. From the
dependence of the cross section on $m(\pi^+\pi^-)=\sqrt{W^2-2WE_\gamma}$, where
$E_\gamma$ is the energy of the photon radiated from the initial state, we
extract $\sigma(e^+e^-\to\pi^+\pi^-)$ for the mass range
$0.35<m^2(\pi^+\pi^-)<0.95$ GeV$^2$. From our result we extract the pion form
factor and the hadronic contribution to the muon anomaly, $a_\mu$.
