The government has signed a three-year deal with Microsoft for a new licensing framework for its Public Sector Agreement 2012 (PSA12).
The government's existing agreement with Microsoft, PSA09, will end on 30 June 2012.
Commenting on the new framework, a Cabinet Office spokesperson said: "The framework fully supports the government's goals of reducing expenditure, while at the same time transforming public services through the adoption of new technologies."
Earlier this month, Microsoft said it would exempt the UK public sector from summer volume licencing hikes that would see organisations paying between 7.5 per cent and 33.4 per cent more for Microsoft licencing.
There will, however, be a one per cent increase for the public sector on its licence pricing from July 2012.
Further increases based on the Office of National Statistics (ONS) official Consumer Price Index (CPI) will be on an annual basis from 1 April 2013 to 2015.
According to Microsoft, the average price hike of around 25 per cent to businesses was necessary because of the devaluation of pound sterling in recent years, which has left an inconsistency in UK prices in comparison to other European regions.
Microsoft said it would act to keep its non-US pricing aligned on a regular basis in the future.