Google is hoping to lure in more business users

The search engine giant said the deal would allow it to provide more companies with web-based services similar to its Google Apps package.

Postini sells encryption and archiving software to more than 35,000 businesses and 10m users across the globe.

The deal is expected to be completed by the end of the third quarter.

'Wider appeal'

"With this transaction, we're reinforcing our commitment to delivering compelling hosted applications to businesses of all sizes," said Google chairman and chief executive Eric Schmidt.

"With the addition of Postini, our apps are not just simple and appealing to users - they can also streamline the complex information security mandates within these organisations."

The acquisition is the third biggest announced by Google after it snapped up DoubleClick for $3.1bn in April and its $1.65bn takeover of YouTube.

Google has been moving closer to directly taking on Microsoft's Office package of applications with the launch of a number of popular business web services including e-mail, calendars, spreadsheets and word processing.

So far its Google Apps service has been adopted by 100,000 business, the firm said.