The State Council's move, aimed at breaking the dominance of Microsoft on desktop computers, will eliminate Microsoft's Windows operating system and Office productivity suite from hundreds of thousands of Chinese government computers over the next few years.
Gao Zhigang, an official with the Procurement Center of the State Council, told reporters that the new policy will be in place by year's end.
At a special congress held to encourage ministries to upgrade to WPS Office 2003, a China-made office productivity suite, Gao said the government will purchase only hardware preinstalled with domestic operating systems and applications. Those seeking exceptions will need to submit a special request.
The new policy is expected to increase the number of government officials who use domestic office software, from one-third to 100 percent, eventually. Gao said the new policy is meant to support the local software industry and protect the state's information security.
Microsoft had been on a, including granting the government inspection rights over Windows source code and creating a for greater China.
The new policy will continue until at least until 2010. The protections are standard and are not meant to discriminate against other countries, the council stated. China is a member of the World Trade Organization, and it is unclear if the new ban contravenes the body's charters.
"The domestic software industry is very insulated. There is poor interaction and partnership with user companies. The increased use of domestic software will make the China software industry more open," said Fei Lin, an official with the State Assets Supervision and Administration Commission.
The ban comes as part of China's efforts to challenge Western technology. Chinese software company Kingsoft used to have 90 percent of the market with its Chinese word processing tool, but has lost nearly all market share to Microsoft Word since the early 1990s.
In addition to commercial reasons for protecting local software, there are security issues. China is placing official support behind the Red Flag Linux operating system, which they trust, because the open-source code allows officials to see that there are no data spyholes installed by foreign powers.
Zhang Xiaonan of ZDNet China contributed to this report.