BBC reports the British government could save more than £600 million a year by switching to open-source software.
George Osborne said the savings would cut 5% off Whitehall's annual IT bill.
He called for a more "level playing field" for all software companies, and urged "cultural change" in government.
Open source software allows users to read, alter and improve its code - in contrast to proprietary software where a company controls the source code.
In a speech on Thursday, Mr Osborne said that despite a government report in 2004 saying there would be "significant savings" in hardware and software if open source software was used, many government departments had not implemented it.