Microsoft has announced that the web version of Office 2010 will be free - a move will put Google Apps in the gun as the tussle between the two software giants intensifies.

Due in the first half of next year, the web-based version of Microsoft Office 2010 will be available at no cost for the 400 million members of Microsoft’s freebie Live services (which include Hotmail).

Already demo’d some months ago, the online version of Office 2010 (codenamed Office 14) lets you not just view Word, Excel and PowerPoint files in a web browser, but also edit and save changes.

Even more radically, Microsoft has pledged that it will work with any browser - IE, Firefox or Chrome - running on any operating system.

Microsoft makes the bulk of its business systems division’s $US19 billion a year revenue from Office.

However, the company is figuring that its better to cannibalise its own rather than see users stray to free alternatives such as the standard edition of Google Apps, or offline contenders such as OpenOffice and IBM’s Lotus Symphony.

And as a revenue safeguard, the online version of Office 2010 will not be as full-featured as the desktop version, whose technical preview version got its first US reviews today - most of which were luke warm (see links below). At the same time, it was leaked on the Torrents.

Microsoft recently relaunched its search engine, as Bing, targeting Google’s core business.

Google has struck back at Microsoft’s jugular, with plans to launch ChromeOS, which could shape up as a rival to Windows.

Meanwhile, The Wall Street Journal said today that Microsoft is working on its own web browser/operating system hybrid code-named Gazelle, although its report does not include any details of the initiative.