Portugal started rolling out the "Magellan" computer at schools last month. It aims to hand out a total 500,000 of the laptops, which cost just 50 euros ($69.29) for school children, at home and export it to countries in Latin America and Africa.

Microsoft CEO Steve Ballmer unveiled the software package called "Magellan Learning Suite" to go with the laptops, which will include Windows XP and Office in addition to development applications, free email and instant messaging.

"This is a unique, amazing and wonderful program on a global scale," Ballmer said at the presentation. "It's a great example to show how the private and public sectors can work together to create new opportunities."

Portuguese Socialist Prime Minister Jose Socrates has made boosting poor education standards and technology at schools a priority of his government.

"We all know that one of the fundamental keys for the country to progress lies in technology," he said. "We all know that the presence of computers in schools boosts education."

The government hopes the Magellan project, named after the 16th century Portuguese explorer, will raise computer access at schools to two students per computer by 2010, up from five now.

Portugal has developed a fledgling software industry in the past few years and in June Microsoft bought Portuguese mobile software company MobiComp.

Ballmer said the Magellan project could help create a platform for the computer industry development in Portugal.

"This is an important step forward for Portugal's high-tech industry," Ballmer said.

While the computer will be assembled in Portugal by a company called JP Sa Couto, it is based on Intel's Classmate PC, a cheap computer that has been adopted in various formats in countries such as Brazil and Indonesia.

Venezuelan President Hugo Chavez signed an agreement to buy 1 million Magellan laptops for Venezuelan schools. The computers also went on public sale in Portugal last week for 285 euros ($394).