More than a third of the software installed on PCs worldwide during 2004 was pirated, with losses from unauthorised software increasing by £2.2bn from 2003, according to a study released this week by the software trade group Business Software Alliance.

Piracy had dropped slightly overall: the study, conducted by IDC, found that thirty-five percent of all software installed on PCs was pirated, down from 36 percent in 2003.

However, estimated losses from software piracy climbed, from £15.8bn to £17.9bn, as both the legal and unauthorised software markets grew from 2003 to 2004. IDC estimated that £49bn worth of software was installed in 2004, compared to £43bn in 2003, with sales of legal software growing 6 percent.

Countries using the most pirated software are Vietnam, Ukraine, China and Zimbabwe. Ninety percent or more of the software used in those countries was pirated during 2004, according to the report. In more than half the 87 countries studied, software piracy exceeded 60 percent.

IDC estimates that 27 percent of software in the UK was pirated, compared to 23 percent in New Zealand, and 21 percent in the US. Austria and Sweden were also among the countries with the lowest software piracy rates.

Software piracy causes a "profound economic impact" around the world, said Robert Holleyman, BSA president and chief executive officer, in a statement. Software piracy costs jobs and tax income in countries with growing software markets, he said.

For the study, IDC used proprietary statistics for software and hardware shipments, and it conducted more than 7000 interviews in 23 countries, and enlisted IDC analysts in more than 50 countries to review market conditions.