The NHS will shave £330m from its software licensing costs following the signing of a nine-year deal with Microsoft, according to the Natinoal Programme for NHS IT (NPfIT).

Under the arrangement brokered by NHS IT director general Richard Granger and Microsoft chief executive Steve Ballmer, the NHS will be able to use up to 900,000 licences, compared with the current 500,000, and will save £112m on its licensing in the first three years.

There are 'break-points' in the contract every three years to allow for re-negotiation if it is considered necessary, says NPfIT.

'This is an exceptionally good deal for the taxpayer that genuinely reflects the buying power of the NHS and our commitment to value for money procurement,' said health minister John Hutton.

'The NHS is in a uniquely strong position as an IT customer, currently the largest procurer of IT services in the world,' said Granger.

'It represents not only substantial savings over both previous NHS pricing but also that of other public sector purchasers - extremely favourable terms and conditions for the NHS have been secured,' he said.

The deal includes a £40m commitment from Microsoft to develop an NHS-specific clincial interface that will be used across multiple health service systems.

The NHS is not paying for the development, but could benefit from any future sales of the software in other countries.

Development is already underway and the first version of the interface is expected next year.

'This is a major investment to help develop a common look and feel of all clinical applications to improve patient care and safety across the NHS,' said Granger.

'It could also benefit the NHS financially as we have an agreement that exploitation of the interface around the world by Microsoft would result in the NHS receiving a share of the licensing fees,' he said.