The controversial licensing scheme was introduced on 1 October 2001. Users were originally told that if they failed to upgrade to Windows 2000 or Office XP by that date, they would have to pay the full cost of the software instead of the discounted upgrade price.
Bowing to user pressure, the company agreed to extend the upgrade deadline to 28 February. This latest development sees the discount upgrade extended a further five months to 31 July 2002.
Bill Landefeld, vice-president for worldwide licensing and pricing at Microsoft, said that in the light of the current economic climate, "our original five-month transition period was just not long enough."
Users were outraged by Microsoft's original deadlines for Software Assurance. A confidential survey of the Computer Weekly 500 Club, an invitation-only club for senior IT directors, revealed that 81% believed the Government should take action against the software giant under general competition policy.
The 500 Club's members come from the UK's 500 biggest companies, including Boots, Lloyds TSB and Abbey National.
The Society of IT Managers (Socitm), said in August that local authorities in the UK would need to find between £50m and £80m over the next two years to satisfy Microsoft's new licensing terms.
Simon Moores, chairman of the Microsoft Forums user group, said that the licence plan was ill conceived and badly executed. "All it has done is focus business users on looking elsewhere for software," he said.
He added that Microsoft might have to reconsider its entire strategy behind Software Assurance. "It has mis-positioned this new licensing," he said. "Microsoft should not be able to change pricing without a good reason. Users have rights."