Instead of purchasing programs such as Word or Excel outright, a Microsoft School Agreement will see software licensed for 12 months at a price based on the number of computers in a school or local authority. It will give schools the latest versions, the company said, so that children do not use "outdated software".
An agreement will save schools money and make sure that all copies of programs are legal, said David Burrows, head of Microsoft's UK education division. "Because the licence covers Microsoft software on all computers, schools are automatically protected against the illegal use of software."
The company is working with the Business Software Alliance to ensure schools realise the importance of ensuring all software is legally licensed and are taking steps to avert potential prosecution. Burrows said Microsoft was not targeting schools in search of illegal software use.
More than 700 schools and six education authorities have signed an agreement, which Burrows calls an answer to the problem of "providing current, legal, software at an affordable price". All secondary schools in Glasgow are covered by an agreement, the largest in Europe.
However, industry observers believe the move is a stepping stone to making all customers pay a subscription fee for Microsoft products in a bid to increase revenue.
The company would like customers to upgrade every two years - more regularly than they do, as most users still have the four-year-old Office 97.
Microsoft's claims that licensing will save users money has been disputed by the Society of IT Managers, which has predicted the switch will cost local authorities an extra pound;50 to pound;80 million over the next two years.
Burrows said licensing would require schools to regard software costs as general expenditure rather than a capital cost. Schools will still have the option of buying programs outright.
However, Dale Frith, head of Porters Grange junior school in Southend, said most schools did not have that degree of flexibility with their budgets.
The British Educational Suppliers Association survey says many schools are still confused about software licensing, with less understanding in secondaries of agreements than last year.