Google and Sun Microsystems held a joint news conference today to announce a multi-year collaborative agreement in which both companies will help distribute the other’s software. The agreement also sets the stage for Google and Sun to introduce server-side software that could pose a serious challenge to Microsoft’s Office suite.

PC users who download Sun’s Java software will now have the option of downloading the Google Toolbar. Under the agreement, the terms of which have not been made public, both companies committed to working together to, “… explore opportunities to promote and enhance Sun technologies.” The Google Toolbar will be offered as part of Sun’s Java Runtime engine.

“Working with Google will make our technologies more available more broadly, increase options for users, lower barriers and expand participation worldwide,” said Scott McNealy, Sun’s chief executive officer.

The agreement is a marketing boom for both firms, making it easier for PC users to download and use Java based programs and applications such as the popular Open Office software which is distributed free-of-charge and is a major competitor to MS Office.

“Google and Java are two of the most widely recognized technology brands because they provide users with online tools that enhance their lives on a day to day basis,” said Google CEO Eric Schmidt. “We look forward to exploring other areas of collaboration.”