The National Health Service (NHS) has extended a software licensing deal with Microsoft for nine years - three times longer than its current agreement. However the deal is renegotiable every three years and will make cost savings of £330 million, according to the health service.

The licensing agreement will see up to 900,000 computers use Microsoft's desktop and mobile computing software, up from 500,000 in its previous agreement. Financial details of the agreement were not disclosed.

The NHS National Programme for IT (NPfIT), which is overseeing the upgrade of the NHS and Department of Health's IT infrastructure, claimed the new software licensing agreement will save the government £112 million over three years and more than £330 million over the nine-year life of the contract. The contract includes renegotiation every three years, should costs reduce or circumstances change within that time period.

NPfIT director general Richard Granger said that Microsoft's commitment to £40 million of research and development under the agreement will result in guidelines and toolkits allowing for independent software vendors to deliver an NHS-specific user interface.

The announcement comes a week after the government's central procurement agency, the Office of Government Commerce, published a report citing the advantages of open source software on both the server side and on the desktop.

The NHS and Department of Health said that despite the agreement with Microsoft, the option to use open source software in the future remains and continues to be evaluated. The NHS has refused to comment beyond the statement.