About 600,000 have been ordered since late last year, with Peru, Uruguay and Mexico making the largest commitments.

Two years ago, the Indian ministry of education dismissed the project's laptop as "pedagogically suspect", arguing that classrooms and teachers are a priority in the country. But some XO laptops are unofficially finding their way into Indian homes and schools.

The first of the project's child-friendly XO laptops running Windows XP will be tested next month in four or five countries and they would be available by September.

The pact with Microsoft - which will add a $3 cost per machine - is not binding on OLPC. The Linux version will still be available, and the group will encourage outside software developers to create a version of the project's educational software, called Sugar, that will run on Windows.

Taking a cue from OLPC, others are also trying to design inexpensive laptops for children in poorer nations, notably Intel with its Classmate PC, which runs Windows and is $400 or less, the NYT reported.