Search giant Google is to acquire web-based security provider Postini for $625m (£310m) in a bid to compete further with Microsoft's Office applications.

The deal will help Google to provide more companies with web-based services such as its Apps package, which includes email, calendar, documents and spreadsheets and a personal start page.

The online tools have been adopted by 100,000 businesses, while Postini sells encryption and archiving software to another 35,000.

Large businesses have been reluctant to move to hosted applications because of security issues and adding Postini's products will help resolve the problem, says Google chief executive Eric Schmidt.

‘With this transaction, we are reinforcing our commitment to delivering compelling hosted applications to businesses of all sizes,’ he said.

‘With the addition of Postini, our apps are not just simple and appealing to users, they can also streamline complex information security mandates within the organisation.’

The acquisition, which is the third largest announced by Google after its purchase of DoubleClick and YouTube, will be completed in August.

Google says it will continue to support Postini customers and invest in Postini products.