The Business Software Alliance (BSA) claims that reducing software piracy by 37 per cent could generate 13,220 new high paying jobs, recoup £1.08bn in tax revenues and contribute £4.46bn to the UK economy.

The research, conducted by analyst firm IDC, illustrates the role of the IT industry as a contributor to jobs, tax revenues and GDP, according to the BSA.

Britain's IT sector will be a £52.1bn industry by 2011, supporting nearly 638,000 jobs and generating £32.5bn in tax each year, the report found.

However, the BSA argues that these forecasts could be improved significantly if piracy is adequately addressed.

"The findings come shortly after the launch of a consultation on proposed changes to copyright legislation by the Minister for Intellectual Property, Lord Triesman," said Julie Strawson, chairman of the BSA UK member committee.

"The consultation, a result of the Gowers review conducted in 2006, aims to ensure that the UK's intellectual property laws are fit for purpose in the digital age."

The Gowers review included proposals to allow greater freedom for consumers legally to transfer music or films between technologies, such as ripping CDs to MP3 files for use on media players.

Similar IDC research released by the BSA in May 2007 estimated that 27 per cent of software installed on PCs in the UK in 2006 was unlicensed.

These figures have remained unchanged for three years, despite efforts by the BSA and others to build awareness among small and medium-sized enterprises about the risks and consequences of unlicensed PC software.

However, some have queried the BSA's calculations of the economic benefits of reducing software piracy, pointing out that a lot of PC users would simply not use a piece of software if they no longer had access to a pirated copy.

Furthermore, free alternatives to most applications are now available on the internet for download.

In light of this new study, the BSA is encouraging the government to improve public education and awareness about software piracy, and to create a stronger deterrent by strengthening intellectual property damages law in the UK.

The BSA also reckons that the government should lead by example in requiring the public sector to use only legitimate software.

This is supported by an increasingly vocal call for public bodies to use open source software based on open and ratified standards, which is cheaper and helps prevent the data being locked in to a particular system or vendor.