This would be largely be due to increased training for users of the software, said the authors of the report who are based at the United Nations University in Maastricht.

But some proprietary manufacturers such as Microsoft do not believe that open source always means cheaper. In 2004 the company launched a campaign called Get The Facts that gave examples of where its software was cheaper and more reliable than open source products.

Voluntary contribution

Open source software refers to software where the underlying programming code is made available to users to read, alter and improve. This is in contrast to proprietary software where a company controls the source code to prevent changes being made.

A great deal of open source software is produced and distributed for free by volunteer programmers, although some companies, such as Red Hat, do sell open source products and associated services to get them up and running.

The study estimates that just one-third of open source programs are produced by businesses in Europe.

Software made by volunteers includes operating systems, such as Linux, and Microsoft Office-like programs such as OpenOffice.org.

Open source programs are already used by many companies particularly to run web servers, the computers that store and deliver web pages.

According to the study, the number of existing open source programs already available would have cost firms 12 billion Euros (£8 billion) to produce.

It estimates that the available programs represent the equivalent of 131,000 programmer years.

"This represents at least 800 million Euros (£525 million) in voluntary contributions from programmers alone each year," the report said.

At the moment, the report said, public organisations were the dominant beneficiaries of this work.

To continue this uptake, the report recommends "correcting current policies and practices that implicitly or explicitly favour proprietary software".

As well as providing incentives to the open source industry it also recommends that schools start to introduce more of the software.

This would instil "an attitude towards information technology that favours the ability to create and actively participate rather than just consume," the report said.

This view echoes those of 111 UK MPs who signed an early day motion in December 2006 to support the use of open source in schools.

The motion also criticised the "outdated" methods used to purchase software for schools that locked them into buying proprietary software.