Schools in the UK are being are being urged to stop signing licensing deals with Microsoft by a government watchdog.

According to the British Educational and Technological Agency (Becta), schools should not sign software licensing deals with Microsoft because of Redmond’s alleged anti-competitive practices.

Earlier this month Becta referred Microsoft to the Office of Fair Trading for its alleged anti-competitive practices in the schools software marketplace and in relation to Microsoft’s approach to document interoperability.

According to the BBC, it says that talks have not resolved its “fundamental concerns” about the academic licensing of its Windows Office 2007 and Vista operating systems. Becta believes that new licensing arrangements are too restrictive, and is concerned over potential inoperability problems with existing software.

Thousands of schools in the UK already use Microsoft software, and Becta’s principle concerns centre around the limitations Microsoft places on schools using its subscription licensing arrangements.

Microsoft’s School Agreement subscription licensing model insists that schools pay for a licence for every PC on the premises which might use its software, regardless of whether or not they were running something else.

Becta’s advice to schools considering moving to Microsoft’s School Agreement subscription licensing model is that they should not do so.

It reminds schools they are legally obliged to have licensed software, but suggests they use instead what is known as “perpetual licensing.” This gives the permanent right to use the software and requires no ongoing payments beyond the purchase price.

The difficulty for schools is that using a subscription service such as Microsoft’s, often results in smaller, annual payments rather than a larger one-off cost.

In its complaint Becta also identifies potential difficulties for schools, pupils and parents who wish to use alternatives to Microsoft’s Office suite, such as Open Office or Star Office, because they may not be compatible.