Disable the Automatic Updates service by opening the Services control panel (Start -> Settings -> Control Panel -> Administrative Tools -> Services)

Right-click on Automatic Updates, select Properties.

Click the Stop button

Change the Startup Type to "Disabled".

To disable Windows Update on a per user basis:

Start regedit.exe on the machine where you want to disable Windows Update.
Go to HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion\Policies\Explorer.
From the Edit menu, select New, DWORD value.
Enter a name of NoWindowsUpdate, and press Enter.
Double-click NoWindowsUpdate, and set it to 1.
Close regedit.

You don't need to reboot. If the user tries to start Windows Update, the system will display the following error message:

Windows Update was disabled by your system Administrator