The UK computer agency Becta is advising schools not to sign licensing agreements with Microsoft because of alleged anti-competitive practices.
The government agency has complained to the Office of Fair Trading.
It says talks with Microsoft have not resolved "fundamental concerns" about academic licensing and about Office 2007 and the Vista operating system.
Microsoft says it wants as many people as possible to benefit from its technology at the best possible price.
Information and communication technology (ICT) is an essential subject in schools, which have to spend huge sums on installing, upgrading and maintaining equipment and software.
"Becta is determined to get the best deal it can for schools"
The outstanding issues centre on the limitations Microsoft places on schools using its subscription licensing arrangements, the agency says.
Becta's advice to schools considering moving to Microsoft's School Agreement subscription licensing model is that they should not do so.
It reminds schools they are legally obliged to have licensed software, but suggests they use instead what is known as "perpetual licensing".
This gives the permanent right to use the software and requires no ongoing payments beyond the purchase price.
The advantage to schools in using a subscription service such as Microsoft's is that smaller, annual payments are involved rather than a larger one-off cost.
But a spokesman for Becta said the problem was that Microsoft required schools to have licences for every PC in a school that might use its software, whether they were actually doing so or running something else.
'Impediments'
It hopes that by referring the case to the Office of Fair Trading (OFT), "Microsoft will move promptly to address the issues raised".
If schools have already signed up with Microsoft, Becta says "they should consider their renewal and their buyout options" alongside any findings the OFT may make.
And it advises them to deploy Office 2007 only "when its interoperability with alternative products is satisfactory".
In a previous report, Becta said primary schools could typically save up to 50% and secondary schools more than 20% of their ICT costs if they switched to what is known as "open source" software.
In its complaint it also identifies potential difficulties for schools, pupils and parents who wish to use alternatives to Microsoft's Office suite, such as Open Office or Star Office, because they may not be compatible.
"Becta is determined to get the best deal it can for schools and indeed for the wider educational system, and to make it as cost-effective and convenient as possible for educational customers to acquire the ICT products and services they choose," the agency said in a statement.
"This demands an effective educational ICT marketplace and the avoidance of impediments to effective competition and choice."
A Microsoft spokesperson said: "Becta has referred Microsoft to the Office of Fair Trading and at this early stage no indication has been given as to how this issue will progress.
"We want to reassure our customers, partners and the education sector that it is business as usual.
"This means we will continue working towards the same goal: enabling as many individuals and schools as possible to benefit from the transformative power of technology at the best possible price."
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