A spokeswoman for the Finance Ministry, which oversees government purchases, said Tuesday that government agencies would use existing Microsoft Office products for the time being rather than upgrade to newer versions.
The Israeli government also will encourage the development of lower-priced alternatives to Microsoft software in an effort to help expand computer use by the public.
To that end, the Finance Ministry has cooperated with Sun Microsystems and IBM in designing the Hebrew language version of OpenOffice software, a freely distributed open-source alternative to Microsoft Office.
"The move with Microsoft was a purely economic decision," said the Finance Ministry spokeswoman, speaking on condition of anonymity. "The Israeli government will not be purchasing new products from Microsoft, but will implement its contract to secure existing systems.
"On a policy level, the government is committed to expanding computer use. We want open source technology to spread, so more people will be able to afford computers," she said.
The spokeswoman said the government was unhappy with Microsoft's refusal to sell individual programs from its standard Office package, which includes an E-mail client, spreadsheet, and word-processing applications. Not all departments require the entire suite of programs, she said.
Microsoft representatives in Israel did not immediately return phone calls seeking comment.
The Israeli move comes amid growing public sector interest in open source, or non-proprietary, software led by the Linux operating system.
Some federal agencies in France, China, and Germany, as well as the city government of Munich, have opted to use Linux not just on servers but also on individual workstations. Entire national governments, including those in Britain, Brazil, Japan, South Korea, China, and Russia, are exploring open-source alternatives to Microsoft.
Governments are a huge software market, accounting for about 10 percent of global information technology spending, according to research firm IDC.
Federal, state and local governments in the United States spent $34 billion last year on huge systems to track everything from tax collection to fishing licenses.