A£17m three-year software deal with Microsoft will save the NHS£50m, the two partners have claimed, as well as 'huge amounts of time and effort'.

The NHS Enterprise agreement provides a single corporate licence for the NHS, covering a range of Microsoft products, including Office XP, Word, Excel and Outlook. It covers earlier, as well as current, versions of the packages and any new versions released in the next three years.

Microsoft healthcare business manager Ellen Pirieat said that last year NHS organisations had made 35,000 separate orders for Microsoft products in deals worth 'significant numbers of millions'.

'We have found situations where NHS organisations have been buying our software from highstreet retailers like PC World at much higher prices, instead of using the volume agreement We have had in place for years.We have also found them buying up pirated software at much cheaper prices that are hard for the NHS to resist, ' she told HSJ.

She likened the agreement to mobile phone users switching from 'pay as you go' vouchers to an annual contract, thereby saving money and hassle, and acknowledged that it also overcame the problems of illegal copying.

The deal will allow a single common desktop throughout the NHS - in theory making training and working across different sites easier - though it does not preclude use of other software packages.

Automatic upgrades of Microsoft products come with the contract, and Ms Pirie expects a large volume of upgrade work to get under way quickly, though for some of the older models of PC upgrades will not be feasible.

Because the software is being bought centrally, individual organisations may have additional cash to upgrade their hardware instead.

Junior health minister Lord Hunt said: 'The agreement will deliver the most up-to-date software to improve the quality and delivery of patient care through better IT support.

'It will be followed by similar deals with other suppliers.