NEW YORK (CNNMoney) -- Snapchat is adding yet another feature as it continues to step up its efforts to compete with Facebook.

On Tuesday, Snapchat unveiled a new tool that lets users collaborate with friends and family to create custom Stories. Stories are photo and video posts that are shared by users and disappear after 24 hours.

Stories can now be customized around a specific event or location, like a birthday party or a trip. The user decides who can add to the Story and who can see it. You can also choose to "geofence" the Story around a certain location (about a block in circumference) -- to allow either only friends or "friends of friends" within the geofence to add to or view the Story.

To create a custom Story, tap the "Create Story" icon in the top right corner of the Stories page. Name the Story, invite a specific list of friends or invite users based on their location.

Stories disappear if no one has added to them in the last 24 hours. Snapchat said the custom Stories update is rolling out and should be available by Wednesday.

The move comes after Facebook-owned Instagram just last week copied more of Snapchat's features -- this time by adding face filters.

Instagram launched its own Stories feature last August, which has become increasingly popular. Last month, Instagram said Stories had more than 200 million daily active users -- or more than the number of daily users for Snapchat in total.

In its most recent quarter, Snapchat parent company Snap said it had 166 million daily active users.

Facebook also introduced an almost identical Stories feature on its flagship platform in late March, and also now offers similar features on Messenger and WhatsApp.

Snapchat has responded with a slew of new features. Earlier this month, the company said snaps would no longer have a time limit, and added editing tools such as the ability to draw with emojis or erase an object in a photo. In recent months, Snapchat has also made Stories searchable and added 3D filters.

On the latest earnings call, Snap CEO Evan Spiegel publicly addressed Facebook's copycat features. "If you want to be a creative company, you have got to be comfortable with and basically enjoy the fact that people copy your stuff," Spiegel said.

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