BT announced today that it has struck a deal with the UK government covering all its central government contracts.

The firm said it had signed a new memorandum of understanding with the government following discussions led by Cabinet Office minister Francis Maude, and "all of BT’s central government contracts were covered by these discussions and remain in place."

BT said in a statement: "Talks focused on new arrangements designed to deliver efficiencies, many of them achieved by changes which will enable wider economies of scale while yielding genuine benefits to government."

An estimated 10% of BT’s revenue comes from the UK government, which is set to detail plans to sharply cut public spending next Wednesday.

BT is the largest single IT supplier to the NHS, with deals in place worth up to £3 billion for telecomms, networks, national services and upgrading NHS IT systems in London and the South.

Philip Green, who led a review of government spending, said on Monday that the government could save billions of pounds of taxpayers’ money if it centralised procurement.

Green said that up to £600m could be saved on the government’s £2 billion telecoms bill alone.

"This agreement means BT will continue to play a central role in the transformation of public services which make a real difference to the lives of people in the U.K. every day," said Jeff Kelly, chief executive of BT Global Services.

"Having found efficiencies in our own business, we have considerable experience which can help the government meet its efficiency objectives," he added.

BT said it expected no change in outlook as a result of the agreement.