Faced with the prospect of losing national and local governments as customers, Microsoft has offered new software licensing terms as part of its negotiations with government representatives, the company confirmed yesterday.

"We have received a new offer, though it's confidential and I'm not at liberty to reveal the details. We do hope to reach the next stage by the end of the month," said Bob Griffith, national secretary for the Society of Information Technology Management (Soctim), the group representing local government IT workers.

Microsoft UK said that the Soctim as well as the Office of Government Commerce (OGC), which is representing the government on a national level, had been sent revised offers, though the firm declined to outline any details.

"We are currently in negotiations with the OGC regarding their licensing agreements. The details of these discussions are customer confidential," said Liz Gent for Microsoft.

Last November, the OGC revealed that it was in talks with Microsoft over a single contract to supply its Office and Windows software to the country's 497,600 public servants. The OGC said that under its new licensing program, Microsoft was looking to raise fees on government contracts by between 50 percent to 200 percent and that the government had not ruled out the idea of ending its contract with Microsoft to find cheaper software elsewhere if a deal could not be reached.

By late yesterday the OGC couldn't say it had actually received Microsoft's latest offer, but did say the negotiations between the two sides were continuing. "The government would be very interested in any new terms that Microsoft would have to offer," a spokesman for the OGC said.

The Soctim has posted Microsoft's revised offer on its internal website, requesting that its members review the details of the proposal. "As is standard practice, we will accept or reject the proposal based on the feedback we get from members," Griffith said.