Is there any feature or additional add-in that can be used to automatically create a document version history?

By this I mean that each time a document is saved, it backs up the previous version so that you can always go back and look at previous versions of the saved document?

I know that this can be done manually by always going in and saving as and changing the document name to a new one but this is not really ideal for the circumstance that I am working with.

Any other suggestions would be much appreciated.

Microsoft Word has built-in support of versions, check out File | Version.

But many people suggest to avoid it, or should not be used too much.