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Software company Xero has teamed up with Telstra to grab a chunk of the Australian telco giant's 700,000 small business customers.

The deal with Telstra will see Xero's internet-based accounting software available to the telco's customers via its T-Suite business portal.

Xero chief executive Rod Drury said the marketing deal was similar to one it had in New Zealand with Telecom.

"That was the model we went with to Australia," he said.

"We couldn't afford to spend a million bucks on market so we put all of our energy into winning these big deals."

Telstra launched T-Suite late last year, offering internet-based software as a service tool including data back-up, virus protection and customer relationship management.

Drury said the June launch date for the Telstra deal was perfectly timed to capture Australian businesses, which tended to have a June 30 year end.

Xero will spend the next three months marketing the product to Australian accountants in preparation for the "floodgates opening in June", said Drury.

On Tuesday, Xero announced it had doubled its customer numbers in the first three months of the year.

It now has 6000 customers - up more than 500 per cent on the same time last year - with 2000 based in the UK, the company's biggest market outside New Zealand.

Drury puts the acceleration down to the Xero brand now having credibility among accountants.

"We are now signing up multiple customers at the same time. Accountants are coming up with 50 customers and we've only just started to scratch the surface," Drury said.