The Home Office said it will save £100 million after extending IT contracts with Fujitsu and Atos Origin.
The £430 million agreement, which was not put out to tender, will extend previous contracts to 2016.
Helen Kilpatrick, HO Director General, Financial and Commercial, said: "By working collaboratively, we have been able to re-engineer the existing contracts in record time."
Fujitsu will receive £330 million to provide new hardware and technical support to an estimated 24,000 users, representing about 70 per cent of the Home Office.
Atos Origin will receive £100 million for supplying the application software.
The Home Office is demanding greater accountability from its IT suppliers under the Next Generation Information, Systems and Technology Transformation (NGISTT) programme.
The Home Office said it would make savings under the new contracts by streamlining IT services, reducing log-in times and enabling Home Office staff to work more flexibly.
Fujitsu and Atos Origin were asked by the government to work together to help achieve these goals as part of the Extend and Blend project.