Google issued a new challenge to Microsoft's dominance of the desktop today with the release a product that will compete directly with Microsoft Word.

From today, consumers will be able to use a program called Google Docs to write, edit and store word processor documents, much as they would with Microsoft's ubiquitous Word.

Google first released Google Docs in late 2006, but until now the program - which works by storing documents on the web rather than on the user's machine - has required an internet connection in order to work.

From today, users of Google Docs will be able to work offline, meaning that edits they make to documents while not connected to the internet will be stored temporarily on their own machines, before being synchronised with the 'main' version when they next go online.

The move forms part of a wider strategy of Google's to compete with Microsoft by offering products similar to those of its rival but delivered via the web.

Traditionally, software companies have made money by charging a one-off licence for their products, but with the evolution of the web, a new model has emerged called 'software as a service', where companies deliver products via the internet either for free or on a subscription basis.

Google offers a range of programs similar to well-known Microsoft Office staples such as Excel, the spreadsheet program, via the web, but to date users have complained that the inability to edit documents while offline was a severe impediment.

The new offline capability for Google Docs will initially work only with the word processor program, though the company is working to introduce a similar feature for all the applications in the suite, it said.

Most analysts agree that Google's word processor, which is free, is less powerful than Word, but say there is definitely a market for a simplified version of the product, especially among consumers who don't take advantage of all of the features of Microsoft's program.

Google has not said exactly how many consumers use Google Docs but said it the figure was "in the millions". More than half a million businesses, meanwhile, have signed up to Google Apps, the suite which combines Google Docs with other programs, including one which lets companies set up and run small, internal websites.

Microsoft, which derives more than 50 per cent of its revenues from licences associated with its flagship Office program and the new Vista operating system, has wasted no time responding to the new threat posed by Google's products.

Earlier this month, the software giant released a product that will allow consumers to write, store and edit material created in programs such as Microsoft Word and Excel directly onto the web. It also released similar web-based versions of its enterprise products.

At the time Matt Cain, an senior analyst at Gartner, said: "This is the start of a fundamental shift in the way computing is done. For the last decade and a half, Microsoft has had a near monopoly on the whole software market. Now that an alternative model is emerging, we're starting to see new vendors enter the market, namely Google, and Microsoft is going to have to fight tooth and nail to hold its position."

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