OGC chief executive Peter Gershon said the agreement would deliver value for money and speed the drive towards the deployment of standardised systems based on common requirements in the public sector.
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The OGC approached Oracle to reach the new pricing policy and Gershon said he expected it to be followed by agreements with other IT suppliers.
Oracle is offering the special pricing on its 9i Database and 9i Application Server, and the OGC has predicted an average 11% reduction in the cost of products directly and indirectly purchased from Oracle.
Iain Campbell, director of Oracle's public sector arm in the UK, said: "The agreement gives the UK government the same pricing as Oracle offers the US government.
The three-year deal will take 9i users to the end of the standard support period, but Campbell said any public sector users with annual support contracts would be entitled to free upgrades to 10i.
However, users with bedded-in systems are sometimes reluctant to upgrade and the OGC said it was still negotiating terms for ongoing support from Oracle.
The OGC also dismissed concerns that suppliers and systems integrators seeking to supply the public sector would react against the new pricing policy."The landscape has changed in the way the government does business and we hope systems integrators embrace the new transparency," a spokesman said.