Google Inc released a special version of its Web-based productivity software designed to meet stringent U.S. government security requirements, as the Internet search giant seeks to outmaneuver rivals in the race to provide federal and state agencies with new technology.

Google said on Monday it was the first company to offer email, calendaring and other cloud-based software products with a special government certification vouching Google's systems and practices meet hundreds of federally-mandated security controls.

The new version of Google Apps comes as the company continues to work with Los Angeles officials to address security concerns relating to an existing contract to provide city employees with Web-based software.

Google said it was working with the city of to address its evolving security and functionality requirements.

Google said on Monday it achieved certification under the Federal Information Security Management Act on Thursday. The certification means Google can handle government information deemed sensitive, but not classified, according to Google.

In addition to the FISMA requirements, Google said the special government-version of the software will store all email and calendar information on servers hosted within the continental United States. And the servers hosting government data will be physically segregated from servers used for corporate customers.

Chief Executive Eric Schmidt said at a news conference on Monday the certification will give government agencies the green light that they need to adopt Google's online software.

We have a hot product, what we're doing is knocking down barriers to adoption, said Schmidt, noting demand among government agencies for Google's cloud-based software is enormous.

Roughly one dozen federal agencies are already testing Google's new government-grade version of the software, Google said, and the company expects the product to appeal to state and local governments as well.

Google's new Apps for Government will offer the same catalog of Web-based products that Google has offered to corporate customers for several years and will be priced the same way: $50 per user per year.

Microsoft has recently begun offering Web-based versions of its popular Office software, which is widely used by corporations and government agencies. Microsoft could not immediately be reached for comment.

Google missed its June 30 deadline to provide its Apps software to certain employees working for the city of Los Angeles amid security concerns by the city's police department.

Google representatives said on Monday the company has already provided the software to roughly 11,000 Los Angeles employees and was working with the city to address concerns affecting the 13,000 public safety officials not currently using the software.

Google generates 97 percent of its nearly $24 billion in annual revenue from advertising. The company has said in the past its Apps business generates hundreds of millions of dollars in annual revenue and is profitable.

(Reporting by Alexei Oreskovic; editing by Andre Grenon)

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