Microsoft dominates the market for office software that is installed directly on computers.

Rivals like Google, however, are offering their software online, on demand, and for free - although some get revenue from advertising placed around the application.

Microsoft recently announced that it was planning to launch its own advertising-financed, on-demand suite of office software.

Experts believe that it will be based around the company's basic consumer-oriented software package Works.

Google tools

Jonathan Rochelle, the product manager for Google Spreadsheets, told the BBC that the new "Google Docs & Spreadsheets" service will be offered free and without any advertising, at least for now.

The service will allow multiple users to collaborate on documents from different locations. All documents will be stored on Google servers, where they can be searched in the same way as e-mail using the company's popular Gmail service.

Mr Rochelle denied that the service was a pre-emptive strike against Microsoft's software-on-demand plans.

Users had told Google that they wanted both products to work the same way, so it was a natural evolution to a "Google-looking interface".

Both products were part of the company's Google's Labs offering - services that are still being tested and may contain bugs. Both will now become official Google websites.

Google's free software offering includes among other things an online calendar, photo storage, web page builder, and messenger service.

Google bought the word processor technology in March 2006 from internet start-up Writely.