Microsoft has begun testing some Web-based Office applications that will be delivered through Office Live Workspace, its online adjunct to Microsoft Office, and will give the company a closer rival to online application suites such as Google Docs.

Microsoft will begin a public beta test of what it calls the “Office Web applications” later this year. They will allow users to create and edit new documents online from within a Web browser.

That’s a significant change from the capabilities in the beta of Live Workspace available today, which requires users to create documents using a copy of Office on their PC and then save them to the Web, where they can then be shared with friends and colleagues.

Its capabilities are quite limited, however. Users must create new documents in the desktop versions of Word, PowerPoint and Excel, and then save them to the Web, where they are stored on Microsoft servers. Others can view the documents online, but editing them requires downloading them to a PC and opening them in Office.

That contrasts with online suites such as Google Docs and Zoho, where the entire process of creating, saving and editing documents is done from inside a browser.

But Microsoft has been testing a “technical preview” of the Office Web applications, which will allow users to create new documents online without needing to have Office on their PC. The Web applications — Word, PowerPoint, Excel and OneNote — include a task ribbon similar to that in Office that lets people do “light editing” from inside their browser, including formatting text and tables.

Microsoft plans to roll out a beta of the Web applications to Live Workspace testers later this year.

It’s been a while now since many have asked publicly for this feature and Google finally complied. You can head over to Settings/Labs in Gmail and enable the two new features that will dock on the left side of your inbox. Using the other Labs features, you can reorder your gadgets and move some of them (chat, labels) on the right side, for a more comprehensive inbox.

The calendar gadget displays your latest entries in an agenda style while the documents gadget will show the latest used documents together with a search function. A third feature was also launched that allows you to add any other gadget by pasting the URL of the file. However, even the Google team admits that the third feature “isn’t very user friendly right now,” but hopefully we will see some improvements soon.

If you’re concerned with security though, keep in mind that not all gadgets are fully compatible with https, so the ones connecting to Gmail via https might get mixed content warnings.