Deploying Java Runtime Enviroments with Local Update Publisher
- First downloaded the lattest offline installer from: 
 http://java.com/en/download/manual.jsp details
 
- start the installer exe (don't click on any buttons once the installer has started though).  
- go to c:\users\%username%\AppData\LocalLow\Sun\Java\[jre version]
 
- copy the *.cab and *.msi files to another folder that you can easilly access
- go into local update publisher, tools, create update
- for the update file choose the msi file that you previously coppied out
- Then click on add files, and add the .cab file you previously coppied out
- Click on add files again and add the following .mst file if you don't want java downloading updates from Oracle  jre1.7.0_xx.mst
 details
 
To create your own mst file using InstEd, follow the instructions at:
http://sourceforge.net/apps/mediawiki/localupdatepubl/index.php?title=Creating_Configuration_files_during_installation
to import the vbscript at http://sourceforge.net/apps/mediawiki/localupdatepubl/index.php?title=Creating_WSUS_updates_for_Java into a mst file for the java msi file