Microsoft is getting its web applications service ready, although it will not give users the freedom of similar offerings from Google and OpenOffice.

Bill Gates' software firm will begin accepting applications for a beta test of web-based versions of applications such as Word and Excel later this year.

The news is a response to a move by Google to make a suite of office applications available to people via the internet for free.

However, Microsoft's service will only allow people to create or edit documents if they already have Office software installed on their computers.

Office Live Workspace will allow users to upload more than 1,000 documents to free websites, and those that don't have Office installed will also be able to view them (although not edit them).

Jeff Raikes, of Microsoft's business division, said: "This new era of connected computing is about empowering people and businesses to balance the power of the internet with the rich interactivity and high performance of client and server software."

A recent Connect survey found that the two major concerns about outsourcing services like IT support were 'loss of control' (56 per cent) and 'budget over-runs' (43 per cent)