BT and Microsoft have joined forces to develop high-speed internet services for both home and business customers.
The companies have pledged to work together to "invent and revolutionise" communications over broadband internet connections.
Under the alliance, Microsoft and BT said they will focus on developing applications for multi-media home computing, mobile computing, for .Net and web services as well as for portals.
Steve Ballmer, chief executive of Microsoft, said: "Microsoft is strongly committed to speeding up the adoption of broadband in the UK, and we are very excited about BT's broadband strategy and innovative no-frills product, which we believe is a great catalyst for broadband penetration."
BT's chief executive Ben Verwaayen said the alliance is about making broadband as attractive as possible to customers by creating applications that will "deliver a superb online experience that meets their needs and aspirations".
Microsoft and BT are already working together on existing projects such as Xbox Live and web services.
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