The government said yesterday it would open up Ordnance Survey data and put it online next year.

Currently, businesses and developers who want to use the data have to pay the Ordnance Survey, despite the fact that the information is collected using taxpayers' money.

But speaking at a seminar in Downing Street yesterday, prime minister Gordon Brown said it was time the data was opened up to encourage innovation.

"Today’s announcement responds to the demands for better use and access to data held by government," he said. "Technological advances and rising customer expectations are revolutionising how we all do things."

Data relating to electoral and local authority boundaries, postcode areas as well as digital mapping information will all be released for free commercial and citizen re-use.

The government estimates this could generate as much as £1bn for the economy.

Ordnance Survey data is seen as key by developers because it can be used alongside other state data on health, education, crime of transport to create new services with a simple user interface.

Stephen Timms, who has ministerial responsibility for the initiative to make state data public, said releasing Ordnance Survey data was vital to the project.

"About 80 per cent of public sector data mentions a location. Making Ordnance Survey data more freely available will encourage more effective exploitation of public data by businesses, individuals and community organisations," he said.

Putting data online will also make local and central government more accountable, allowing citizens to see information on how their money is being spent.

This is vital when helping people evaluate different services, according to communities secretary John Denham.

"Anyone conducting public service reforms must be open about the process allowing outsiders to see what is happening and giving them the opportunity to suggest alternative ways of doing things if necessary," he said.

"This can only happen if the necessary information and data is easily and readily available."