Google is to introduce a new operating system in a direct challenge to the dominance of Microsoft, as the companies battle over the future of how we use personal computers.

The aim of the new software, called Google Chrome OS, is to speed up the process of surfing the internet significantly.

The company believes that the software brings us closer to being able to keep all our important files, such as family photographs and digital music, online instead of on a home PC.

They would be kept in a “cloud” on the internet — cloud computing enables people to keep all their information online and access it from any computer anywhere in the world.

The company said that the ultimate goal was to create a system that would allow computers to be booted up and ready to use within a few seconds.

Google aims to install the new system initially on netbooks — small, low-cost computers that are currently outselling more powerful personal computers.

Google said it believed that the software would also be used eventually on bigger PCs.

“Speed, simplicity and security are the key aspects of Google Chrome OS,” said Sundar Pichai, a Google vice-president, and Linus Upson, engineering director, in a blog post.

“We’re designing the OS to be fast and lightweight, to start up and get you on to the web in a few seconds.”

Cloud computing changes the focus of operating systems from controlling large, cumbersome desktop PCs to smaller, slimline computers that access the internet as swiftly as possible.

Google has been frustrated in its attempts to turn its vision into reality by what it perceives to be the limitations of Microsoft’s software, which has not been designed with cloud computing in mind.

“The founders of Google are not going to cry over Microsoft’s possible demise,” said a former Google executive turned technology investor. “But they’re more excited to do cooler stuff, and more things on the web better. They want to free themselves of the shackles of Internet Explorer and Windows.”

The move will intensify the rivalry between Google and Microsoft, whose Windows operating system is used on the majority of the world’s personal computers.

Google said that the new project was a natural extension of its Chrome browser and was necessary because older operating systems were designed at a time when the internet did not exist. Microsoft declined to comment on the development.

Google said that the new software would be released later this year on an open source licence, meaning that computer developers and programmers across the world will have the chance to use, modify and improve it.

Netbooks running the finished product will go on sale in the second half of next year. The news spread quickly on the blogosphere, with many commentators applauding the move. In the influential TechCrunch blog, it was claimed that Microsoft’s software for netbooks was too old.

“Let’s be clear on what this really is,” said MG Siegler, on TechCrunch. “This is Google dropping the mother of bombs on its chief rival, Microsoft.”

Google, however, has a big task on its hands. Although rival systems such as Linux and Apple’s OS X have received widespread acclaim, some analysts estimate that Windows and other Microsoft products are used on more than 90 per cent of computers. Microsoft is to release an updated version of its own operating system, Windows 7, in October.

Despite Microsoft’s dominance, Google has repeatedly ventured into its territory. First it launched the web browser Google Chrome in competition with Microsoft’s Internet Explorer.

It also recently released Android, an operating system for mobile phones in competition with Microsoft’s Windows Mobile, which is used on the majority of smartphones.

A whole new verb

Sept 1998 Google founded by Larry Page and Sergey Brin, below, students at Stanford University, California

May 2000 Ten foreign-language versions of Google.com released

June 2000 Google is the world’s largest search engine

Aug 2004 Google shares sell for $1.67 billion (£1 billion), making many workers paper millionaires overnight

June 2005 Google Earth, satellite imagery-based mapping, is set up

Oct 2006 It is reported that Google buys YouTube for $1.65 billion

May 2007 Google Street View available in US Nov 2007 Android operating system for mobile phones launched

May 2008 Google Health allows people to collect, store, and manage medical records online

Sept 2008 Google Chrome web browser launched

Feb 2009 Google Ocean provides a 3-D look at the ocean floor

March 2009 Google Street View comes to UK

Sources: Google, Times database