Mr Gates, worth pounds 35bn, is thought to be the mystery purchaser of three adjoining properties, a large house and two mews houses, together valued at over pounds 8m, in Holland Park, west London. Continuing difficulties with the authorities in America, anxious to ease the stranglehold of Microsoft in the computer and Internet markets, and a growing love affair with Britain under Tony Blair, are thought to have persuaded Mr Gates to consider spending at least part of the year in the capital.
His choice of London as a new alternative base to Seattle on America's West Coast will delight the Labour leadership, keen to portray Britain as a go-ahead country, especially in high technology. In a much-trumpeted visit last month, Mr Gates endorsed Mr Blair's pounds 100m scheme to link Britain's 32,000 schools to the Internet. The announcement was made at Holland Park Comprehensive, close to the house.
Microsoft has chosen Britain for its largest research and development facility outside Seattle by investing $80m (pounds 47m) in a new project in Cambridge. Last month, the company moved its UK headquarters to a new site at Reading, its largest property in Europe, a direct drive along the M4 from Holland Park.
To the consternation of Conservative MPs, suspicious of Labour's links with big business, Mr Gates's company has also been chosen to supply Whitehall with a new secure software system.
The house in Holland Park is registered in the name of a Seattle-based corporation. Planning consent has been granted by the local council for conversion of a coach-house at the back into a family dwelling and for a music room at the main house.
The 20,000sq ft Victorian main house is being rebuilt internally to install a pounds 500,000 stereo and a remote control management network, similar to the one in Mr Gates's $45m mansion in Seattle. Robert Moore Ede, the agent acting for the application, would neither confirm nor deny the house was Mr Gates's.
However, local estate agents, neighbours and workers associated with the project maintain the house was being renovated for the Microsoft billionaire.
If Mr Gates moves in, he will be in good company. In the same road reside Richard Branson, the Saudi ambassador, a member of the Qatar royal family, racehorse ownerRobert Sangster and Mr Gates'sMicrosoft partner, Paul Allen.
Mr Gates's growing love affair with this country comes as he faces mounting problems at home. On Friday, Microsoft is due to appear in an American court to answer claims brought by the US government that the company is exploiting the immense success of its Windows software system to stifle consumer choice.
US government sources confirmed that when the Department of Justice last threatened action against Microsoft, one of the options being considered was to break up the company. Mr Gatesvowed he would never allow this to happen, and Washington sources said last week that in 1994 he threatened to move his headquarters to Britain if the regulators proceeded with the plan.
Additional reporting by Mark RoweReuse content