The Office of Government Commerce (OGC) is negotiating a renewal of a three-year agreement with Microsoft.
OGC spokesman Martin Day said that while the existing memorandum of understanding primarily covers software licensing fees, the new three-year contract will focus on services and support.
"We wanted to put something in place to have a seamless transition between the two contracts," Day said.
The new deal is not expected to be signed until the end of September.
The original deal in March 2002 coincided with software agreements with Sun and IBM. Day said the government is on target to save the £100m expected from the deals.
While the OGC is renewing its deal with Microsoft, a number of governments around the world have recently taken a more serious look at open source.
Last year the city of Munich dropped Windows for Linux and is currently looking to deploy open source operating systems across all of its departments, and local governments in India, Australia, Italy and France have all recently decided to move to open source.
Meanwhile Microsoft has created a new public sector organisation within the company, charged with influencing governments' buying decisions. It has also rolled out an entry-level, lower priced version of its Windows XP operating system, called Windows XP Starter Edition, and has negotiated with governments to deploy the software to novice users.
And its efforts seem to be paying off. Earlier this week it sealed a deal with the London Borough of Newham, which is seen as one of the country's most progressive government users of IT.
Scarlet Pruitt writes for IDG News Service