The Tories could order the wholesale introduction of open source IT systems if they are returned to office at the next election.

Shadow chancellor George Osbourne is considering a report that recommends putting a £100m spending cap on government IT contracts and opening up procurement to small firms using open source software.

The opposition are on the offensive over the government's "wasted billions" on "catastrophic IT projects," including the National Programme for IT in the NHS. Their report, by Dr Mark Thompson, of Judge Business School at Cambridge University, claims an alternative approach could save the tax payer £600m a year.

"The Conservative Party is looking to the future. We have led the debate on using open source software in government, and I'm delighted that Dr Mark Thompson has come forward with these detailed recommendations," said Osbourne.

"These proposals aren't just about saving money - they're about modernising government, making the public sector more innovative and improving public services." He went on to call for a wider debate on the issue.

Thompson's report said savings "would come not just from reduced licensing costs, but importantly by freeing government bodies from long-term, monopoly supply situations."

It called for "new government data standards" across government to allow large scale IT projects to be split into small modular components.

It suggested the government should never again need to sign an IT software contract worth over £100 million, noting, "smaller IT projects mean less risk of failure, and will cut costs by opening up the procurement system to more companies, increasing competition for IT contracts."

These data standards will create a level playing field for open source software.

The report has been seized on by open source advocates. Graham Taylor - Chief Executive of OpenForum Europe said, "If Government is to stop being locked-in to the past, and is to support more effective, more innovative, and more cost effective IT solutions it has to practice an open procurement strategy and to wise-up to the opportunity offered by open standards and open source software.

"The Conservative policy is reinforcing what is happening elsewhere in Europe, but not happening fast enough in the UK."

Mark Taylor, CEO of Sirius, the UK's only government accredited company that specialises in open source services, said.

"This latest move by the Conservative leadership is most welcome and confirms at the highest level what we have been saying for years. Open Procurement, Open Standards and Open Source are the keys to redeeming the UK Public Sector's IT track record and to renewing Britain's IT industry."

Even comedian Stephen Fry is getting in on the act. "It's a wave that's rolling over Europe and America and it's only right that we in Britain should ride that wave too. I think politicians from all sides should endorse the aim for public systems to be run on free & open source software," he said.