"Depending on the system, Microsoft is asking for a rise in licence fees of between 50% and 200% on government contracts," said an OGC spokesman.
The department is negotiating with Microsoft to roll out a single contract to supply Office and Windows software to the country's half a million civil servants.
The NHS and the Ministry of Defence have already signed similar deals with Microsoft; and the Society of Information Technology Management (Socitm) - the local authority IT directors' organisation - is in negotiations about a single deal for the UK's councils.
The Government spends £120m a year on the direct purchase of Microsoft products and the OGC said the increased licence fees would add about £60m to the bill.
Microsoft confirmed that talks are taking place with the Government, but declined to reveal details of the company's initial proposals.
The software giant has come under heavy criticism for its revamped licensing schemes for both corporate and home use of Windows and Office. Microsoft has twice pushed back the deadline for upgrading licences, prompted by complaints from corporate users.
During the London launch of Windows XP in October, Microsoft chief executive Steve Ballmer addressed the controversial theme of the latest licensing agreements for corporate customers.
He said Microsoft had received a lot of feedback from customers, particularly in the UK and France, but added that the company had addressed the problem by extending the deadlines.
According to The Times, the Government has already begun examining whether to switch to an alternative software supplier.