The service only went live last week with Whitehall claiming it would help revolutionise the way the public sector used key IT services such as email, word processing and enterprise resource planning.
The government acknowledge the outage with an update on its official G-Cloud Twitter page.
Power outage on microsoft azure means #cloudstore is temporarily unavailable. Patch being applied so will update when normal service resumed— G-Cloud (@G_Cloud_UK) February 29, 2012
The issue with the Windows Azure cloud service will no doubt offer food for thought to those organisations concerned about the viability of shifting vital business resources into the cloud.
The problems started at 1:45am GMT with a global outage of Microsoft's Windows Azure service management, which meant that customers using Azure were unable to carry out service management operations.
Microsoft posted an update to its Azure status page stating that the issue should not impact on the availability of storage accounts, although it warned that some currently running hosted services may experience capacity issues.
A following update said that the problem had been traced back to a certificate issue, and that the firm was working on a fix.
At the time of writing, the latest update said that Microsoft was continuing to roll-out the hotfix, and it would progressively enable service management for customers as this progressed.
The company apologised for any inconvenience caused to customers.
Microsoft is one of the largest cloud computing providers in the world, and has previously touted the reliability of its services and datacentres.
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A survey of local authorities has found that they face challenges in the areas of data, compliance and mobility.
More than 800,000 home users could be affected