Primary schools could cut their computer costs by nearly half if they stopped buying, operating and supporting products from the world's largest software company, government research has found.

Secondaries could also slash their information technology overheads by a quarter if they moved away from Microsoft and other commercial programs, according to an analysis carried out by the British Educational Communications and Technology Association, the Government's ICT agency.

The findings could undermine Microsoft's hold on the education market, but they raise the prospect of millions of pounds of savings for British schools and colleges which spend around £1 billion a year on ICT.

In a report to be published next week, obtained by The TES, Becta will highlight schools which have turned to free software instead of the market leader's products. Becta does not name Microsoft in its analysis. But almost all schools use some of the company's products.

The association analysed costs at 33 schools which use paid-for software, and compared them with 15 which have pioneered the use of free programs, known as open source, and the pared-down hardware to run them.

Average costs, including software, hardware and support costs, were 24 per cent less per computer in secondaries using open source.

A 1,000-pupil school would save £19,000 - which would translate to around £60m if all secondaries transferred. In primaries, costs were 44 per cent lower per computer, an annual saving of £13,750 for a 250-pupil primary, or roughly £220m across the country.

Schools have to pay for a Microsoft licence to run its products. Microsoft said costs could work out at £35 a year per computer - £10,000 for a medium-sized secondary.

The Becta report features a secondary which spent £13,000 on open source material. The Microsoft equivalent would have cost £44,000.

Orwell high, in Suffolk, was able to add 100 computers after switching to open source.

Advocates of open source say it saves on support costs, and on upgrading hardware to run new software. But some curriculum software will not work on open source machines.

Microsoft programs including Word, Excel and Internet Explorer have free equivalents. There is a debate about whether open source versions are as good but their advocates say they meet students' needs.

Stephen Uden, education relations manager for Microsoft UK, said: "I do not want to speculate too much about a report which has not been published yet."

He said that Microsoft software bills accounted for only 3 per cent of schools' IT spending, and that they only paid a fifth of the rates companies pay for Microsoft Office.

* warwick.mansell@tes.co.uk