More than 1,100 Chinese companies have been hit with penalties for using pirated software in a government crack down to stamp out the trade.

Over 80 per cent of the software installed in China is illegal, and much of the country's bootleg application exports are installed in other countries around the world.

The clampdown will help the Chinese economy, according to Federation against Software Theft chief executive John Lovelock.

"A ten per cent reduction in use of pirated software would add over $20bn (£10.3bn) to the Chinese economy," he said.

The state brought 769 intellectual roperty right cases in 2006 and 1,212 offenders were prosecuted, up 52 per cent and 62 per cent respectively from 2005, says the Chinese Supreme Peoples Court.

At the same time there has been a sharp rise in the number of firms using legal software - up from 1,500 in December to 2,300 in this month.

China introduced new anti-piracy laws in April 2006.