An Audit Commission report published last week, 'Message Beyond the Medium' revealed that a fifth of councils are still at the planning stage in implementing e-government. Another fifth said they have had no success to date in delivering services.

The report warns millions may be wasted. 'Local government budgeted £1.8bn on IT in 2001-2002 alone. Historically IT has not been a well-managed part of public service delivery and the risks are increasing,' it said.

The Commission, which surveyed over 120 councils throughout England, said national targets on technology were a distraction.

'The e-government challenge lies not in putting technology in place for its own sake, but harnessing it to better deliver the services local people need and want,' said Sir Andrew Foster, controller of the Audit Commission.

'The 2005 deadline to get all government services online kick-started the process but it has become too dominant,' added Jenny Crighton, senior manager public services research at the Audit Commission. 'The risk is that hesitant councils are missing the bigger picture and will only strive to go online rather than letting business need drive how new technologies can help deliver services.'

Crighton added that 'finding a combination of IT and business skills is rare'.But, she said, 'It is not necessary for them to come from the same individual. It is most important for those at senior levels to understand the business need so they can engage councillors whose role is key for approving projects.'

Other findings revealed that two thirds of chief executives don't feel supported with district councils being identified as the most hesitant at tackling e-government. They typically have trouble convincing councillors, and knowing where to start.

Councils that have achieved e-government success have done so through strong leadership, taking a realistic view of their capacity, releasing internal funds and working collaboratively with other councils, public sector agencies and the private sector, the report said.

Crighton said: 'There are a lot of councils still struggling to get the basics right. There needs to be more work on getting a shared understanding. This can be achieved by implementing a formal peer system where more confident councils can share best practice.'

Despite some of the gloomier findings, the majority of councils are optimistic about e-government, with 94% agreeing it will make a 'significant contribution' to meeting overall council objectives.