This may even mean redefining the government's target of putting all services online by 2005 to include take-up goals and making them available through the private sector, says the report 'Better Public Services through e-government'.

'A significant amount of taxpayers' money is being spent on delivering public services through electronic means,' said Sir John Bourn, head of the NAO.

'The major challenge is to get services online and to encourage and enable people to use them. Otherwise the considerable potential gains in departments' efficiency will not be delivered and large amounts of public money will have been wasted.'

The government's bad track record with major IT projects and the lack of any methodology to measure the efficiency of putting services online are the key risks to e-government, claims the report.

Low public awareness and trust of government services must also be addressed if they are to be taken up online.

'This suggests that departments may increasingly need to use intermediaries such as banks, building societies, post offices, retail outlets to provide services to citizens,' says the report.

Departments have raised several concerns about meeting the e-government deadline and the report makes several recommendations.

It says civil servants' ability and aptitude to use IT need significant development, further technological improvements are needed to update existing IT systems, more reliable assessment of costs and benefits are required and departments lack baseline data against which to monitor and measure improvements in efficiency made possible by IT.

Just over half of the 524 services that government departments routinely provide are currently delivered online. But the report said few are transactional services that allow the public to interact with government, like applying for a driving licence.

The NAO compiled the report after examining seven central government IT projects and comparing the benefits achieved with private sector projects by the RAC, BT, Oracle and Anglian Water Services as well as e-government developments abroad.